1. Event Overview In the third quarter of 2017, the company achieved operating income of 1,212 billion yuan, an increase of 44.81% over the same period last year, and continued to maintain rapid growth; during the reporting period, the company achieved net profit attributable to shareholders of listed companies of 54,531 million yuan, an increase of 30.92% over the same period last year. The first three quarters of 2017 achieved revenue of 3,016 billion yuan, a year-on-year increase of 13.11%, and net profit attributable to shareholders of listed companies of 189 million yuan, an increase of 88.38% year-on-year. 2. Analysis and judgment that the third quarter's revenue accounted for nearly half of the first three quarters, and the performance promise to further achieve a sustainable increase in net revenue 1. Revenue for the third quarter of 2017 accounted for nearly half of the revenue for the first three quarters. The reason is: In the first half of the year, the company completed the acquisition of 100% of Zhangwei Technology's shares, Guanda Film and Television's 100% shares, and the remaining 20% of Keyi Communications, which in turn increased revenue and net profit. 2. At present, the performance commitments and completion status of the company's acquisition targets are as follows: the “net profit achieved through assessment” that should be achieved by Zhaowei Technology in 16/17/18 should be no less than 36 million yuan, 44 million yuan, and 55 million yuan respectively, and the “net profit achieved through assessment” that Guanda Film and Television should achieve in 16/17/18 should be no less than 62 million yuan, 806 million yuan, and 100.75 million yuan respectively. The “net profit achieved through assessment” that should be achieved by Keyi Communications in 16/17/18 should be no less than 3.5 million yuan yuan, 40.2 million yuan, 48.24 million yuan. In the first half of 2017, the operating income of Zhangwei Technology, Guanda Film and Television, and Keyi Communications during the reporting period was 596.889 million yuan, 173 million yuan, and 459.09 million yuan, with net profit of 21.2279 million yuan, 73.8078 million yuan, and 17.782 million yuan, respectively. Most of the 2017 performance promises have been fulfilled, and we have the ability to continue to support the company's future performance. After the merger and acquisition of Edcon, the Internet advertising business developed rapidly and is expected to become a continuous growth point for the company's performance. After completing the acquisition of Edcon in 2016, the company continued to develop comprehensive Internet marketing services. Internet video distribution and search engine marketing (SEM) were the main Internet business growth points. Other Internet marketing services developed in a coordinated manner to serve customers in various industries such as automobiles, fast selling products, medicine, finance, education, etc. As an agent for major domestic search engine media, including Baidu, 360, Sogou, etc., Edconce mainly provides customers with search engine media purchasing and advertising services. It also provides marketing data mining and analysis, marketing strategy formulation, customer website optimization, accurate marketing, advertising effectiveness monitoring, and advertising optimization services to solve customers' marketing problems. Edcon's performance promises that the audited net profit for the years 15-19 will not be less than RMB 14 million, RMB 27 million, RMB 35.1 million, RMB 45.63 million, and RMB 50.193 million, respectively. According to the “2016-2022 China Advertising Market In-depth Survey and Development Prospect Forecast Report”, it is estimated that by 2018, the scale of the Chinese mobile advertising market will exceed 300 billion, and the penetration rate in the online advertising market is close to 80%. Since 2015, search engines have been the media form with the largest share. It is expected that search advertising will continue to stabilize at about 33% market share from 2017 to 2019, and the market space is expected to reach 100 billion yuan. Zhihai Yang Tao was acquired in the first half of the year to continuously strengthen the “IP source+content production+marketing promotion” operating platform “IP source+content production+marketing promotion”. The content industrialization operation platform for “IP source+content production+marketing promotion” has been initially established. Through the acquisition of 60% of Zhihai Yangtao's shares, the company's service capabilities in brand management business such as brand planning, public relations services, creative production, and offline activities have been strengthened. In the first half of 2017, the company achieved brand management revenue of 77.6299 million yuan, an increase of 329.12% over the same period last year, mainly due to the acquisition of 60% of Zhihai Yangtao's shares, increasing the scope of the merger. With the gradual improvement of the content industrialization operation platform, brand management revenue is expected to become a new profit growth point for the company. 3. Profit forecasting and investment suggestions We believe that the company's traditional business will grow steadily in the future, and that the profit margins of extended mergers and acquisitions will increase year by year. There will be business synergy, and steady performance growth will support the company's valuation. The company's net profit for 17/18/19 is predicted to be 216 million yuan, 243 million yuan and 271 million yuan respectively. The company's 2017-2019 EPS is expected to be 0.67 yuan, 0.75 yuan and 0.84 yuan respectively. The PE corresponding to the current stock price is 37X, 33X, and 30X, respectively, and the reasonable valuation for the next 12 months is 25-30 yuan, maintaining a “careful recommendation” rating. 4. Risk warning: 1. Macroeconomic downturn; 2. Business development falls short of expectations.