The company released its three-quarter report, achieving net profit of 190 million yuan in the first three quarters, in line with the previous performance forecast. The company released the three-quarter report. In Q3 of 2017, the company achieved operating income of 1,212 million yuan, an increase of 44.81%; realized net profit of 54 million yuan, an increase of 30.92%; and realized net profit of 46 million yuan after deduction, an increase of 13.74%. In the first three quarters, the company achieved operating income of 3,016 billion yuan, an increase of 13.11%; net profit of 190 million yuan, an increase of 88.38%; net profit after deducting non-return net profit of 176 million yuan, an increase of 95.84%. The profit level is close to the median performance forecast, in line with the performance forecast, and in line with our expectations. The company expects net profit of 198-269 million yuan in 2017, an increase of 40%-90% over the previous year, mainly due to the increase in the scope of mergers after the equity acquisition, the improvement of integrated marketing capabilities, and the optimization of the business structure. The advertising market has picked up since June 2017, and the revenue side has grown rapidly, yet profitability is still under pressure. According to CTR statistics, the year-on-year growth rate of all-media advertising investment changed from negative to positive in June 2017, and the overall advertising market has been picking up steadily. The advertising market in July-August increased 5.3% and 0.7% year on year respectively. The overall market recovery led to rapid growth on the company's revenue side. Judging from financial reports, the company's accounts receivable increased 77% from the beginning of the period, accounts receivable increased 105% from the beginning of the period, and advance payments increased 35% from the beginning of the period, all indicating that the industry is picking up and the company's business scale is expanding. However, profitability is still under pressure. Q3 gross profit margin of 12.69% and net profit margin of 4.82% are all quarterly lows since the merger of Zhangwei, Guanda, and Zhihai Yangtao in February 2017. The content industry chain Guanda Film and Television's “Youth Department” is accurately positioned, and the TV drama “Waves and Flowers” produced by Guanda Film and Television, which has extensive acquisition targets for subsequent projects, premiered on Hunan TV. The ratings have exceeded 1% many times, ranking first in the same period, and the Guanda Film and Television Youth Department is accurately positioned. According to the company's project promotion, the follow-up project, the urban suspense mystery drama “Super Sensibility,” has already killed China TV; the urban drama “Warm Strings” is scheduled to be broadcast exclusively on Hunan TV and is currently being filmed. In addition, the company has plenty of reserves for follow-up projects, and the works currently being planned and created include “E-sports Lovers,” “Date a Knight in Dress,” and “That Rice Bucket Next Door,” and many other youth dramas. Judging from financial reports, the company's inventory is mainly Guanda's production of movies and TV dramas and script rights. The inventory balances at the end of the Q2 and Q3 periods were 170 million and 210 million respectively, up 85% and 24% from the previous quarter, indicating that Guanda's film and television business scale continues to expand. Halfway through the holdings reduction process, the pressure on stock prices is expected to gradually be relieved. In June, the company's controlling shareholders and directors disclosed the holdings reduction plan. In July, the controlling shareholders decided to end the holdings reduction plan and promised not to reduce their direct holdings for the next 12 months, demonstrating confidence in the company's development. Other shareholders intend to reduce their holdings by no more than 2.47% of the total share capital. At present, holdings have been reduced by more than half, and holdings have been reduced by 0.71% of the total share capital. With the gradual implementation of the holdings reduction plan, it is expected that the pressure on stock prices will gradually be relieved. The company's business is skewed towards the content industry chain, but it will take time for the business structure to be adjusted. Maintaining the company's TV advertising, content marketing, and digital marketing trinity, and one-stop integrated marketing layout has been gradually improved. The business structure is continuously optimized, and new breakthroughs have been made in new customer development. The content industry chain layout has been fully implemented, and the company's business is gradually leaning towards the content industry chain. However, it will take time for the business structure to be adjusted, and the continued decline in the profitability of television advertising is expected to still put a lot of pressure on performance in the coming year, and the company's forecast will be lowered slightly. Net profit for 17-19 is estimated to be 262, 360, and 451 million yuan. Referring to the higher performance growth rate of comparable companies and companies in the industry, combined with valuation switching considerations, a reasonable valuation level is PE 23-25X in '18, with a target price of 26.22-28.50 yuan, maintaining an increase in holdings rating. Risk warning: There is a risk that the performance of the target merger and acquisition will not meet the promise of goodwill impairment, and the popularity of TV commercials has declined.