Main points of investment:
The company's revenue and net profit has increased significantly in the past 16 years, mainly due to the profit contribution of the new marketing target. In 16 years, the company's revenue was 2.823 billion (+ 213%), the return net profit was 182 million (+ 229%), and the non-return net profit was 166 million (+ 1107%). During the reporting period, the revenue of the electrical machinery and equipment manufacturing industry was 14.01 million (- 86%), accounting for 0.5% of the total revenue, selling Mingjia Lightning Protection 100% stake (5.1 million of the impact on net profit), canceling the subsidiary Thunder God, and completing the divestiture of the original surge protection product business; mobile marketing revenue of 2.81 billion (+ 250%), micro-win interaction and cloud time and space completed in December 2015. 16-year sales expenses 17.56 million (+ 2%); management expenses 128 million (+ 102%), mainly M & A marketing company project fees; financial expenses 4.68 million (+ 12%). In 2017, first-quarter reported revenue of 680 million (+ 18%), net profit of 65.65 million (+ 13%) and non-return of 43.72 million (- 15%); investment income of 21.19 million (+ 321%), mainly related to the transfer of 2.91% equity in Palm Culture, 13.5% equity in Kid Technology and 10% equity online and offline.
The three marketing targets acquired during the reporting period have achieved good results. The target Jinyuan Interactive merger Table began the formal transformation of the company's mobile marketing in January 2015, with a 100% equity acquisition at a transaction price of 409 million in the form of shares and cash, and the performance commitment to deduct non-return net profit of 40 million, 48 million and 55 million in 2015-2017, respectively. The 2016 standard realized revenue of 1.924 billion (+ 140%) and deducted non-return net profit of 49.11 million (completion rate of 102%), down 6% from the same period last year. Jinyuan Interactive is mainly engaged in mobile integrated marketing platform distribution.
The acquisition of 88.64% of the remaining equity in Yun Spatio-temporal in 2015 is realized. Through the issuance of shares and cash, the company acquired 88.64% of the remaining equity in Yunshi at a transaction price of 332.4 million yuan, which was consolidated on December 31, 2015; the performance commitment for 2015-2017 deducted non-return net profit of 30 million, 39 million and 50.7 million, respectively. The realized revenue of the 2016 standard is 391 million (+ 179%), and the non-return net profit is 40.3 million (completion rate 103%), an increase of 29.5% over the same period last year. Cloud time and space mainly focuses on the multi-platform distribution of mobile advertising for Internet and mobile game advertisers by integrating all kinds of long-tail traffic resources.
The acquisition of a 100% stake in Micro-win Interactive in 2015 will be consolidated. The company acquired 100% stake in WeChat Interactive at a transaction price of 1.008 billion yuan through share issuance and cash, which was consolidated on December 31, 2015; the performance commitment for 2015-2017 deducted non-return net profit of 71.5 million, 93.3 million and 120 million, respectively. The realized revenue of the 2016 standard is 520 million (+ 54%), and the non-return net profit is 106.14 million (completion rate 114%), an increase of 43% over the same period last year. Micro-win interaction is mainly engaged in application system advertising resource agency.
Profit forecast. Be optimistic about the divestiture of the main business of the company and speed up the transformation of mobile marketing. We estimate that the company's net profit in 2017 and 2018 will be 234 million yuan and 257 million yuan respectively, and the corresponding EPS will be 0.37 yuan and 0.40 yuan respectively. With reference to the industry average, the company is given a 17-year PE valuation of 30 times, corresponding to the target price of 11.1 yuan, to maintain the buy rating.
Risk hint. The impairment risk of goodwill, the uncertainty of management change, the lower-than-expected performance of the acquired company, and the systemic risk of the market.