Main points of investment
Event: in August 2017, the company announced that it planned to pay cash to buy 100% equity interest in Zhuhai Shitong through its own funds or through bank loans, with a transaction value of 385 million yuan. In September 2017, the company announced that it planned to buy 60% equity interest in Shanghai Zhiqu in the form of cash, with a transaction value of 288 million yuan. On September 22, 2017, the company's announcement responded to a feedback on the application documents for non-public offerings.
Endogenous growth: traditional media agency business or maintain stability, high growth of content marketing. The company continues to promote the "one body and two wings" strategy of giving priority to the development of content industry and the strategic development of digital industry based on traditional media agency business. In terms of "integration": the company has continuously strengthened its purchasing advantages in the head media of satellite TV and video websites, and has been awarded the "Top Ten Advertising Agency" of Zhejiang Radio and Television for 11 consecutive years and the "Top Ten Agency" of Hunan Satellite TV for three years in a row; the number of agents in iQIYI, Inc. and Youtu has also increased rapidly, and it is one of the leading local agency companies. In terms of "two wings": the 1.151 billion yuan non-public offering was launched in 2017Q1, and the production of variety shows is expected to be guaranteed.
Acquire Zhuhai Shitong and expand the territory of traditional media agents. Zhuhai Shitong is a network and station linkage media agency business advertiser. In terms of advertisers, it serves more than 100 brand customers. In terms of delivery media, the main cooperation TV stations and video websites are: CCTV5, CCTV6, CCTV10 and other CCTV stations; provincial satellite TV stations such as Beijing Satellite TV, Zhejiang Satellite TV and Hunan Satellite TV; and mainstream Internet video websites such as Youku, iQIYI, Inc., Tencent, Letv and so on. By paying the price in five installments and signing a five-year labor contract and non-competition agreement, it is expected to achieve a deep binding with the core personnel of Zhuhai Shitong.
Acquire 60% stake in Shanghai Zhiqu and enter mobile marketing. Shanghai Zhiqu founding team is composed of Douban North China, East China and South China Advertising Department, and has rich experience in mobile marketing industry. As for advertisers, Shanghai Zhiqu has planned and implemented mobile marketing activities for more than 400 first-tier brands such as Land Rover, Dongfeng Nissan, Hyundai, NIKE and Huawei. In terms of cooperative media, Shanghai Zhiqu has cooperated with more than 100 high-quality mobile media for a long time, and has served exclusive media such as Douban, Zhihu Inc., NetEYun Music, Snowball and so on. at the same time, it is also the core agent of high-quality media such as Trip.com, Meitu, Mafehive, Quick Reading Comics, broadcast all the time, Xiaoxiu and so on.
Profit forecast and investment advice. 1) regardless of the impact of the merger and acquisition of Zhuhai Shitong and Shanghai Zhiqu, it is estimated that the EPS from 2017 to 2019 is 0.18 and 0.21 respectively, and the homing net profit is 4806 / 70.71 million respectively. 2) considering the impact of the merger and acquisition, it is estimated that the net profit from 2017 to 2019 will be 10706max 12782 / 155.67 million yuan, and the EPS from 2019 to 2019 will be 0.39pm 0.47max 0.57yuan respectively. As the company's major mergers and acquisitions have not yet been completed, there is uncertainty, so we will not make rating recommendations for the time being.
Risk hints: the risk of M & A failure; the risk of shrinking TV advertising market; the risk that the performance commitments of Zhuhai Shitong and Shanghai Zhiqu can not be realized; the progress of non-public offering may not be as expected.
