The performance from 1 to 3Q17 was slightly lower than expected. Beiba Media announced the 1 to 3Q17 results: revenue was 2.89 billion yuan, up 16.7% year on year; net profit was 81 million yuan, down 9.7% year on year, slightly lower than expected. The gross margin decreased by 3.1 ppt year on year, mainly due to the decline in the gross margin of the advertising business and the increase in the revenue share of 4S stores; the cost rate for the period decreased by 1.6 ppt, due to the company's proper cost control. Trends in the digital television media business are dragging down the advertising sector's performance. From 1 to 3Q17, advertising revenue fell 2.3% year on year to 329 million yuan, and gross margin fell 2.4ppt to 74.9%, mainly due to the large decline in the high-margin digital TV business. Body advertising remains steady. The number of 1H17 double-decker cars increased by 56% to 1,454, which will lay the foundation for performance growth after gradual launch. The company is about to sign a new car body advertisement use rights contract with the public transport group. The new agreement may have a certain impact on the development of the advertising business. The utilization rate of electric bus charging stations has increased. The 3Q17 company put into operation 6 new charging stations. From 1 to 3Q17, it put into operation a total of 20 charging stations, a total of 143 charging stations, and achieved revenue of 22.45 million yuan. After the utilization rate increased in the third quarter, the gross margin also increased to 27.1%. The second phase of the charging station project (it is planned to build ~400 more charging stations) is expected to be completed by the end of the year, while about 3,000 electric buses are expected to be in place. The public transport group will promote about 12,000 electric buses by 2020, and the monopolistic charging business will start contributing significantly to profits in 2018. It is difficult to improve the driving school business in the short term. Revenue from 1 to 3Q17 decreased 25.6% yoy, and gross margin fell 1.8ppt to 36.1% yoy. The impact of the driving training industry's self-study and direct examination policy and relief from the foreign population in Beijing continues. The number of students enrolled in driving schools has declined further. The performance of the 3Q summer season fell short of expectations, making it difficult to improve the driving school business in the short term. Profit forecast Due to declining gross margin in the advertising business and lower than expected driving school business, we lowered our EPS forecasts for 17 and 18 by 15% and 7% from 0.16 and 0.2 yuan to 0.13 and 0.18 yuan, respectively. Valuation and recommendations Currently, the company's stock price corresponds to 34x P/E in 2018. We maintain the recommended rating and lowered the target price by 7.18% to 7.50 yuan based on the segmented valuation method, which has room for 20.58% increase from the current stock price. The construction of risky charging stations has slowed; the new contract for the advertising business has led to a decrease in gross margin.