1Q17 results fell short of expectations. Beiba Media announced 1Q17 results: operating income of 857 million yuan, up 17.3% year on year; net profit attributable to parent company was 18.8 million yuan, down 25.1% year on year, corresponding to earnings of 0.05 yuan per share. Performance growth fell short of expectations, mainly because driving school business revenue and profit fell far short of expectations. Trends The advertising business has declined slightly, and the car service business is growing steadily. In 1Q17, advertising revenue fell 11% year on year, and amortization costs were relatively reduced after contract renewal in 2017. Profits are expected to rise steadily. The revenue of 4S stores increased by 30.3% to 658 million yuan. Furthermore, car leasing and scrapping businesses achieved high growth of 22% and 43%, respectively. The macroeconomy picked up in 2017, and the car service business is expected to maintain steady growth. Electric bus charging stations are expected to contribute to increased performance in 2017. In 2016, the company built a total of 20 charging stations, including 155 bus charging stations and 34 public charging stations. They will be put into use in 2017, and more than 400 bus charging stations will be built. The Beijing Public Transport Group will promote about 12,000 electric buses by 2020, and the monopolistic charging business will become the company's main source of profit starting in 2018. The driving school business continues to be sluggish due to policy effects. 1Q17 revenue decreased 26.0% year over year, and gross margin fell 7ppt. The impact of the driving training industry's self-study and direct examination policy and the relief of the foreign population in Beijing continues, and the number of students enrolled in driving schools has declined further, leading to a decline in both revenue and gross margin. We think it is difficult to improve the driving school business in the short term. Profit forecast Due to the large decline in driving school business revenue and gross margin, we lowered our earnings per share forecasts for 2017 and 2018 by 16% and 10% from RMB 0.4 and RMB 0.52 to RMB 0.33 and RMB 0.47, respectively. Valuation and recommendations Currently, the company's stock price corresponds to 2017/18 41/29x P/E. Since the performance fell short of expectations, we maintained the recommended rating, but lowered the target price by 6.4% to RMB 16.24, which is 20.21% higher than the current stock price. According to segmental valuations, the target market value is 6.55 billion yuan. The slowdown in the promotion of risky electric buses has led to low utilization of charging facilities; the number of driving school students continues to decline.