Core viewpoints

Benefiting from the acceleration of epitaxial mergers and acquisitions and the growth of the industry scale, the business of the three core business blocks is developing rapidly.

The company's revenue in the first half of 2017 was 1.701 billion, an increase of 70.75% over the same period last year, deducting non-net profit of 176 million yuan, an increase of 43.52% over the same period last year. The revenue of the digital outdoor sector totaled 400 million yuan, an increase of 76.46% over the same period last year, mainly due to the consolidation of new companies. The digital equipment sector benefited from the 538 million revenue recovery of small spacing LED equipment, an increase of 22.64% over the same period last year, and the revenue of the digital marketing sector was 761 million, an increase of 131.46% over the same period last year.

The company's business direction is clear, and the Internet marketing market capacity is growing rapidly.

The company is committed to the continuous integration of the three main industries, and the profit growth of the digital marketing sector is sustainable. According to iResearch's 2017 Annual Monitoring report on China's online Advertising Market, China's online advertising market reached 290.27 billion yuan, an increase of 32.9 percent over the same period last year. The size of the mobile advertising market reached 175.02 billion yuan, with a growth rate of 75.4%. The company's priority layout of mobile marketing may continue to benefit the growth of the industry.

With a firm will to transform, the company has initially built a complete advertising marketing ecology.

Through years of transformation, the company has initially built a complete communication service platform. Through the coverage of public relations planning, agency execution, advertising platform, interactive activities, advertising resources and digital display equipment, we provide customers with customized and integrated communication solutions. Through continuous coding data mining technology, accurate portraits for customers to achieve efficient advertising. Through the establishment of "one committee and four departments" to integrate the business of subsidiaries, the company assists each subsidiary to further improve and develop with the help of the resources of the group. At the same time, the company has completed the share buyback of the second phase of the employee stock ownership plan, demonstrating the company's management's confidence in the company's future operation and management.

Considering the continuous layout of the company in the whole chain of Internet marketing, the employee stock ownership plan and the company board reduction plan both demonstrate the company's stable stock price and confidence in subsequent operating results, we expect the company's EPS to be 0.98,1.19 and 1.34 in 17-19, respectively, corresponding to 20x, 17x and 15x, respectively, maintaining a "recommended" rating.

Risk hint: the integration risk of the company's acquisition target, the goodwill risk, and the risk that the promised profit of the target is not up to standard.