Summary:

Event: the company released its financial results for the third quarter of 2017. During the reporting period, the company achieved operating income of 2.817 billion yuan, an increase of 50.41% over the same period last year, net profit of 346 million yuan, an increase of 33.5896% over the same period last year, and earnings per share of 0.56 yuan.

Comments: the increase in net profit attributed to shareholders of listed companies in the first three quarters of 2017 is mainly due to the steady development of the company's production and operation, the expansion of sales scale and orders of core business sectors such as digital display equipment, digital marketing services and digital outdoor media networks, and the continuous enhancement of the profitability and service ability of the company's marketing service group.

Benefiting from the outbreak of the small gap market, the effect of the company's technology and production line investment is gradually released in terms of capacity improvement, and the LED business has achieved great-leap-forward growth.

With the expansion of sales scale and increasing orders of the three major sectors of digital display equipment, digital marketing and digital outdoor, the profitability and service ability of the company's intelligent marketing service group continues to enhance. In the future, the company will give full play to the advantages of technology, capital and scale, while maintaining the growth of LED display equipment business, extend the marketing communication service industry, achieve coordination and complementarity among subsidiaries, and improve the performance of the company.

Profit forecast: we predict that the company's revenue in 2019 will be 40.0,52.8 and 6.63 billion yuan, and the net profit belonging to the shareholders of the parent company will be 6.59,9.07 and 1.15 billion yuan, respectively, and the corresponding EPS will be 0.87,1.08,1.37 yuan respectively. Give a rating of "overweight".

Risk tips: 1) continuous high growth trend of small gap product revenue; 2) the profitability and service ability of the company's intelligent marketing service group are lower than expected.