Key investment points: Controlling shareholders increase their holdings and are optimistic about the long-term development of the company. The controlling shareholder, Guangxin Group, increased its holdings of the company's shares by 520,000 shares through an auction transaction on June 26. The average transaction price was 7.84 yuan/share, and the increase amount was 4.074 million yuan, accounting for 0.03% of the total share capital. After the increase in holdings, the controlling shareholder held 15.3% of the shares. It is not ruled out that it will continue to increase its holdings in the future. In 2016, the company achieved operating income of 10.915 billion yuan, a year-on-year increase of 13.36%, and net profit of 611 million yuan to mother, an increase of 11.61% year-on-year, after deducting non-net profit of 572 million yuan. The company's business structure was transformed and upgraded. In 2016, the three major traditional business media agents, free media, and brand management achieved total revenue of 7.410 billion yuan (+4.59%), accounting for 68% of revenue (down 6 percentage points). The digital marketing business achieved impressive results, achieving revenue of 3.257 billion yuan (+40.32%), accounting for 30% of revenue (an increase of 6 percentage points). The 2017 semi-annual report estimates net profit range of 272 million yuan to 310 million yuan, a year-on-year growth rate of 5% to 20%. It is planned to acquire Shanghai Tuochang with 528 million cash to improve the layout of major customers in the new game business. The company plans to acquire 80% of Shanghai Tuochang's shares in cash at a transaction price of 528 million yuan; net profit deducted from non-return to mother in 17-19 was promised not less than 60 million yuan, 75 million yuan, and 88 million yuan, respectively. The main highlights of the target company Shanghai Tuochang: 1) It has its own DSP, SSP, AdExchange and DMP multi-function advertising management matrix; 2) Customers include well-known game customers such as Supercell, Youzu Network, NetEase, etc., and apps and e-commerce platforms; 3) Key CPA, CPC and other effective advertising settlement methods. The acquisition of Shanghai Tuochang will add advertisers in new business formats such as games to the company, and continuously enhance its business capabilities in the digital marketing sector. Continue to focus on digital marketing and build the “G-NOVA Digital Nebula Alliance” platform. In 2016, the company focused on building the “G-NOVA Digital Nebula Alliance” platform. The first batch of 54 companies including Tencent, IBM, Alibaba, and Today's Headline joined. In the future, the company will focus on building a marketing ecosystem for the entire industry chain driven by big data technology. Furthermore, it has successively completed investments in Easy Advertising (1.7%, transaction price 20 million), Haikou Zhongce (60%, transaction price 14 million yuan), and Nanao Sports (10%, transaction price 3.33 million yuan), and reached strategic cooperation agreements with Double Blade Sports to expand the fields of mobile marketing, outdoor advertising, and sports marketing. In July 2016, the company invested 28.8 million yuan to subscribe for 6% of Junbo Network's shares (mobile app distribution and traffic marketing), and invested 2.1 million yuan to participate in 6% of Manren Culture's shares (two-dimensional integrated marketing), and invested 2 million yuan to establish joint ventures with famous media personality Yang Lan's Sunshine Sky Media and Zhao Wei's Hebao Entertainment Media to establish a joint venture in Guangyang (IP marketing and social marketing), holding 20% of the shares. The company's outreach expands a rich integrated marketing communication layout, focusing on sports, music, film, television, and animation. Profit forecast. The company strengthens “traditional+digital” business integration, focusing on digital marketing and the development of new business formats. We are optimistic about the steady growth of the company's endogenous growth. We expect the company's net profit to be 703 million yuan and 800 million yuan respectively in 2017 and 2018, corresponding to EPS of 0.40 yuan and 0.46 yuan, giving the 2017 industry average valuation level 26 times PE and a target price of 10.40 yuan, maintaining the purchase rating. Risk warning. Digital marketing platform business development falls short of expectations, and there is a risk of impairment of goodwill.