Investment highlights: 2016 full-year performance is expected to increase by 65.42%-92.25%. The company released a performance forecast on January 19. It is expected to achieve net profit attributable to mother of 37-430 million yuan for the whole year, an increase of 65.42%-92.25%; in the fourth quarter, net profit to mother was 111-171 million yuan, an increase of 76.19%-171.43%; of these, the impact of non-recurring profit and loss on annual net profit is about 21 million yuan. The company adheres to a development strategy that places equal emphasis on endogenous growth and epitaxial development, and has a perfect business layout. It can now provide customers with comprehensive online and offline marketing solutions covering brand PR, interactive activities, internet advertising, outdoor advertising, and intelligent display equipment. The LED small-pitch business grew steadily, and the 51% equity acquisition of Artixium's shares entered high-tech applications such as virtual displays. The company's digital equipment division has a dual-brand sales pattern of “Joint Construction Optoelectronics” and “Eshida”, and achieved net profit of 118 million yuan in the first three quarters, an increase of 59.52% over the previous year. The company continues to develop and promote LED small-pitch products, which are widely used in military, meteorology, airports and other fields. Currently, PH1.2mm products have been industrialized, and PH0.8mm products have been successfully developed. In July 2016, the company increased its capital to Artixium and acquired 51% of its shares, extending the business to high-tech application fields such as virtual advertising for sports events (virtual stadium screens), while paving the way for entering the cultural and sports industry and future international layout. Acquire Precision Volkswagen, Shenzhen Limar, and Litang Marketing to enhance the online digital marketing service business. The company has successively completed acquisitions of Accurate Audience (20160307), Shenzhen Limar (20160510), and Litang Marketing (20160516). Currently, the digital marketing service business has covered various segments such as brand PR marketing (Youtuo PR), interactive event marketing (Litang Marketing), and Internet marketing (Shenzhen Lima, Precise Audience). In June 2016, the company invested 200 million yuan to obtain 33.33% of Shibong Network's shares to lay out big data and data services for offline scenarios. Tree Bear Network is a leading provider of commercial Wi-Fi products and solutions in China. It has leading advantages in channel networks and product technology. It has set up about 180,000 commercial Wi-Fi stores, and plans to reach 1 million merchants within three years to create its own big data for offline scenarios. Acquired Huahan Culture, Ocean Media, Xi'an Luyi, and Shanghai Chengguang to enter the offline outdoor marketing market. The company acquired resources such as Huahan Culture, Ocean Media, Xi'an Luyi, and Shanghai Chengguang, and entered local outdoor advertising markets in Shanghai, Xi'an, Taiyuan, etc., and increased the layout of outdoor media resources in Chengdu through mergers and acquisitions of Tibet BotTV. The company's own media area is about 250,000 square meters. By the end of the third quarter, the company had cooperated with 53,844 media vendors nationwide to establish an outdoor advertising resource database covering 342 cities across the country, with 12,749 advertising resources, and a total media resource area of 17.16 million square meters. Profit forecast. Optimistic about the development of the company's original LED business and digital marketing (outdoor media), the company's net profit for 2017-2018 is estimated to be 545 million yuan and 693 million yuan respectively, corresponding to fully diluted EPS of 1.08 yuan and 1.37 yuan respectively. Referring to the average valuation of marketing companies in the same industry and the VR+ education applications involved, the company was given a 17-year 30-fold valuation, corresponding to the 17-year target price of 32.4 yuan, and a purchase rating. Risk warning: The overall growth rate of the digital marketing and outdoor marketing industry is declining; risk of impairment of goodwill.