Investment summary Achieving the industrialized operation of “IP source+content production+marketing promotion” Simei Media is a first-class advertising enterprise in China (comprehensive service category) that provides customers with a full range of integrated marketing and communication services such as consumer research, brand management, national media planning and agency, advertising creative design, entertainment marketing, PR activities, outdoor media operation, and digital marketing. The company has completed a number of mergers and acquisitions in recent years, and has begun to enter fields such as content production and promotion, SEM services, and automotive digital integrated marketing, etc., and has maintained long-term cooperative relationships with well-known brand customers such as P&G, Shanghai Jiahua, Suitable Materia Medica, Pepsi, Yunnan Baiyao, and COFCO Group. Joined the China 4A Association in 2008, became the 5th governing unit of the China 4A Organization Comprehensive Agency Professional Committee in 2010, and the vice governing unit of the China 4A Association in 2012. We believe that: (1) The growth rate of the domestic advertising market is stabilizing. Compared with the traditional media sector, Internet advertising has a higher growth rate and better development prospects. Simei Media has gradually reduced its traditional media business in recent years and has gradually gained strength in new types of business such as Internet advertising, which is in line with the development rules of the industry. (2) The acquisition integration completed by Simei in recent years can open up the upstream and downstream of the cultural media industry chain, exert synergies, increase the company's service content, and realize the industrialized operation of “IP source+content production+marketing promotion” content, thereby enhancing customer stickiness and the company's overall competitiveness. (3) The company is involved in content production due to the acquisition of Guanda Film and Television, Keyi Communications, etc., which is beneficial to increasing the company's overall valuation compared to the company's previous involvement only in marketing. Profit forecast We expect the company's revenue to increase by 22.87%, 24.84%, and 25.22% in 2017-2019, respectively, and net profit of 66.94%, 44.24%, and 31.37%, respectively. According to the current share capital estimate of 317 million shares, the 2017-2019 EPS is 0.75 yuan, 1.08 yuan, and 1.42 yuan respectively, and the corresponding PE is 36.31 times, 25.21 times, and 19.18 times (the stock price is 27.23 yuan/share at the closing price on November 14, 2017). The median dynamic price-earnings ratio of comparable listed companies in the same industry in 17 and 18 was 23.71 times and 18.17 times, respectively. The company's valuation level was higher than the median value of comparable listed companies in the same industry. For the first time, a “prudent increase in holdings” rating was given. Risks indicate risks of macroeconomic fluctuations, policy risks brought about by industry regulation, increased market competition, acquisition integration risks, etc.