Main points of investment:
Yutang Union created a consolidated statement to promote the growth of China reported net profit by nearly 45 times. 16H1, the company achieved revenue of 2.35 billion yuan, an increase of 408.26% over the same period last year, and a net profit of 67.5984 million yuan, an increase of 4473.88% over the same period last year. Among them, the revenue of the printing ink business was 164 million yuan (YoY-3.73%), accounting for 7%, while the forest products and chemical business successfully stopped the loss, with revenue of 273 million yuan (YoY+12.71%), accounting for 11.63%. The new media business grew strongly, with revenue of 1.91 billion yuan (YoY+3859.23%), accounting for 81.32%, mainly due to the addition of Yutang Lianchuang and Beijing Youli. Yu and Tang Lian contributed 1.79 billion yuan in revenue and 54.0431 million yuan in net profit in the first half of the year, becoming the company's main source of profit.
Ink and forest chemical industry leaders are actively transforming and embracing new media. The company's original main business is water-based ink research and development, production and sales, in 2011 began to expand to the upper reaches of the industrial chain, has funded the establishment or acquisition of six forest chemical products companies, the main business will be extended to the production and sales of rosin, turpentine and their deeply processed products. Since July 2014, the company has entered the Internet marketing industry through epitaxial mergers and acquisitions. It successively acquired Internet marketing companies Guangzhou Orange (60%), Beijing Zhichuang (100%), Beijing Youli (10%) and Yutang Lianchuang (100%), and further acquired the remaining 90% stake in Beijing Youli in May 2016, making it a wholly-owned subsidiary. At present, the company's business has comprehensively covered digital marketing services, mobile marketing, social marketing and search engine marketing and other sub-areas, to achieve the development of both traditional and new media industries.
Epitaxial mergers and acquisitions to create a diversified digital marketing territory. The company actively promotes the M & A work of the Internet marketing plate, and the subsidiary business has its own focus and integration with each other to build a new media system for Tianlong. 1) Guangzhou orange fruit: focus on CRM, provide digital marketing services throughout the network, and the main customers are domestic large automobile manufacturers and large multinational fast consumer enterprises; 2) Beijing Zhichuang: focus on APP, focusing on mobile marketing integration services, mainly serving Audi, Mercedes-Benz, BMW and other automotive brands (60% of car advertisers) and global home chemical brand Reckitt Group 3) Beijing Youli: focus on ePR, providing content marketing and social integrated marketing, first promoting "social platform maintenance" to create a new social marketing model; 4) Yutang Co-creation: focusing on SEM, providing search engine marketing services through its "product interaction" platform. During the reporting period, Qihoo 360's search marketing agent developed steadily, and Sogou's search marketing agency business grew rapidly. And obtained the Qihoo 360 search online service, tourism industry vertical agency and Sogou search retail, online service, game, education, operator industry exclusive agency.
Profit forecast. The company's original ink, forest products business gradually stabilized, optimistic about the future to the digital marketing field of the overall transformation. We estimate that the 17-year and 18-year return net profit of the company is 268 million and 341 million respectively, and the corresponding EPS is 0.92 yuan and 1.17 yuan respectively. Give a 17-year 40-fold valuation and a buy rating corresponding to the target price of 36.8 yuan.
Risk tips: ink, forest products business accelerated decline; M & An integration effect is not as expected.
