The Investment Advisory Company released its 2017 semi-annual report on the evening of August 7. The first half of 2017 achieved total operating income of 4.473 billion yuan, an increase of 0.91% over the previous year; realized net profit attributable to shareholders of listed companies of 190 million yuan, a year-on-year decrease of 26.62%; and realized net profit attributable to shareholders of listed companies that deducted non-recurring profits and losses of 180 million yuan, a year-on-year decrease of 27.84%. No-profit distribution plan. The increase in the company's revenue and profit was in line with the company's latest announcement of the performance forecast, but fell short of previous expectations. The weak resilience of some of the company's subsidiaries has affected the company's overall performance. This is the pain of the company's transformation into a new marketing group. Considering the complete layout of the company's integrated marketing and communication industry chain and the development trend of big data business, plus the high moat and strong core competitiveness that the province still maintains in terms of customers, technology and media, we predict that the company's 2017-2019 EPS will be 0.22 yuan, 0.32 yuan and 0.42 yuan respectively. Corresponding to the current stock price PE of 29x, 20x and 15x, respectively, maintaining the “recommended” rating. The company's revenue remained stable, and gross margin declined markedly. Traditional media agents dragged down overall performance. The company's overall revenue in the first half of 2017 reached 4.473 billion yuan, which is basically the same as the same period last year. By business sector, the revenue of the most important traditional media agents was 2,487 billion yuan, down 3.48% year on year; digital marketing revenue reached 1,635 million yuan, up 12.52% year on year, continuing to contribute the main growth to the company's business; private media revenue was 192 million yuan, down 13.62% year on year; brand management revenue was 65.83 million yuan, down 31.40% year on year; PR activity revenue was 93.21 million yuan, up 10.65% year on year; in addition, magazine distribution and other business revenue totaled about 190,000. In terms of proportion, the revenue share of traditional media agents in total revenue continued to decline, from 60.73% at the end of last year to 55.59%, which is also lower than the same period last year; the share of digital marketing rose to 36.54% from 29.84% at the end of last year. The company followed the trend of media changes and used big data and digital marketing as the main drivers of performance, but the decline in the performance of traditional media agents has basically offset the rise in the digital marketing sector. The overall gross margin of the company's main business ended the upward trend since it expanded revenue for 15 years. It fell sharply to 14.95% from 18.12% at the end of last year, and also fell 2.56% compared to the same period last year. The main reason is that the gross margin of traditional media agents, which account for the largest share, fell to 8.61%, down 4.32% from the end of last year, and 3.65% compared to the same period. The gross margin of the digital marketing sector was 18.29%, which is basically the same as the same period last year. Although the share of the digital marketing sector has increased, its effects cannot offset the decline in the gross margin of the media agency sector. The company's fee structure is relatively stable, and the share of sales and management expenses both declined slightly over the same period last year. Interest expenses have declined sharply due to the availability of fixed capital increases, and there has been no significant change in overall expenses. Some subsidiaries are less resilient to risk and have experienced a decline in operations. The company's performance at the parent company level is in line with expectations, especially in the field of digital marketing. However, some subsidiaries are less resilient to risk. Last year, Kaida fell far short of expectations due to the loss of key customers. This year Kaida is already looking for new replacement customers, but the overall gross margin has been drastically reduced compared to the original key customers. In the first half of this year, Kaida only achieved a net profit of 15,000 yuan. Another risky subsidiary, Yarun, mainly deals in television advertising media resources in second- and third-tier cities. Affected by changes in media attention, the performance of this part of the media market was sluggish, yet the company's transformation did not bear fruit in the short term. The net profit for the first half of the year was -28.08 million yuan, which had a great impact on the overall profit level of Guangdong and Guangzhou Corporation. With the exception of Blue Gate, which is slow to complete due to the pace of revenue recognition, the completion status of other subsidiaries with performance promises is currently still within the plan. However, for subsidiaries that have completed or have no performance promises, some traditional media agency subsidiaries may also face certain risks and pressure to transform. In addition to the negative impact on the company's profits, it also faces a certain risk of impairment of goodwill. In the future, the company's focus should be on the progress of Yarun and Kaida. Continue to build a big data marketing platform, continue to expand the marketing industry chain layout, and the company's marketing big data alliance brings together top big data service providers at home and abroad. Through a powerful data back office, it has created more than 100 kinds of diverse and customized big data products, so that brands can find big data services suitable for their needs at any time and help brands quickly achieve digital transformation, thus greatly improving the company's brand marketing and digital marketing service capabilities in a short period of time. Meanwhile, in the first half of this year, the company successively set up provincial Guanghan Whisky and acquired Shanghai Tuochang. The company's extended expansion will further enhance the company's international marketing capabilities and industrial layout in the field of mobile marketing, and enhance the company's competitiveness in integrated marketing and digital marketing. Risk warning: subsidiary business risk, goodwill impairment risk, loss of core customers, macroeconomic slowdown, integration effect is lower than expected, big data platform construction falls short of expectations