The performance of the company's headquarters is expected to remain stable. 1) under the gradual clarity of the warming trend of TV media, the company's TV media agency business is expected to benefit. According to the latest data from CTR, in February 2018, the cost of TV media publications increased by 27.2% compared with the same period last year, and has achieved positive growth for six consecutive months. 2) the digital marketing industry maintains rapid growth, and the company's digital marketing business is expected to continue to exceed expectations in the period of rapid growth; 3) the company deepens the layout of content production to strengthen content marketing business, and content marketing is expected to become a new growth point of performance. According to the company's performance forecast, it is expected to achieve a net profit of 6603.19-72.6319 million in 2017, an increase of 100% Mu 120% over the same period last year. In addition to table factors, the substantial increase in performance is mainly due to the outstanding performance of the digital marketing business of this part.
The acquisition of Zhuhai Shitong and Shanghai Zhiqu strengthens the competitive advantage and thickens the company's performance. We believe that the company will benefit from two points: 1) the acquisition of integrated media and customer resources, complementary advantages to form a synergy, strengthen the competitive advantage of Internet video, and expand the scope of marketing services through the layout of vertical mobile marketing to enhance the value of advertising. 2) the revenue scale of Zhuhai Shitong and Shanghai fun is relatively small, and their business is in a period of rapid expansion, which on the one hand leads to the rapid growth of the company's performance, on the other hand, it can also effectively hedge against the increase in procurement costs caused by the concentration of Internet traffic (expansion of the scale and bargaining power), and improve the profitability of the company.
1. Acquire Zhuhai Shitong, strengthen the advantage of TV media resources, and enhance the scale of digital marketing business. Zhuhai Shitong's main business is media agency business and media operation business, providing a full range of services such as "network and station linkage strategy + media purchase + advertising". 1) rich in customer resources. By the end of September 2017, there are more than 100 service brand customers and most of them are well-known brands at home and abroad. representative brands include Centennial Mountain, Hongxing Erke, Wantong Pharmaceutical Co., Ltd., Heinshiro, Dali Park, Fangte Amusement Park, three Squirrels, Little Red Book, NetEYun Music and so on. 2) the advantage of media resources is obvious. Cooperative media include CCTV, provincial satellite TV, provincial terrestrial channels, city and county channels, video websites, comprehensive websites, etc., and won the exclusive agency rights of some modules of iQIYI, Inc. (liquor). 3) Core talents have profound qualifications and rich experience, master core media resources, accumulate a large number of core customers, and the company binds core talents deeply (signing labor contracts and non-competition agreements, market-oriented incentive system, etc.).
2. Acquire Shanghai fun, integrate mobile media resources in vertical areas, and establish competition barriers in subdivided areas. Shanghai Zhiqu is positioned to provide brand advertisers with comprehensive mobile solutions for planning, creativity, design and implementation, and ranks 36th on the 2017 list of digital marketing companies. 1) Advertising main end, Shanghai Zhiqu provides services for more than 700 high-quality brand owners, including Jijia, CHANEL, BURBERRY, Land Rover, MUJI, Kindle, Starbucks Corp, Intel and so on. 2) on the media side, Shanghai Zhiqu focuses on integrating excellent APP resources in four vertical areas: music, travel, youth culture and sports health, targeting high consumption power users in vertical areas, and providing advertisers with more in-depth and focused mobile marketing solutions. at present, it has won the exclusive agency / core agency of a number of high-quality vertical media. Including Zhihu Inc., NetEyun Music, ONE one, Music Power, course grid, snowball, etc., and has more than 200 high-quality media resources, such as Trip.com, Hornet Honeycomb, Curiosity Daily, second shot / continuous broadcast / Xiaoca Show, Mei Pomelo, etc.
Investment suggestion: we expect the company to achieve net profit of 66.24 million yuan, 150 million yuan and 190 million yuan from 2017 to 2019, corresponding to 0.24,0.55,0.70 yuan of EPS. With reference to similar comparable companies, we will give a valuation of 30 times in 2018, corresponding to the target price of 16.50 yuan, with a "buy-A" rating.
Risk tips: TV media pick up less than expected, digital marketing industry competition deteriorated, Zhuhai Shitong and Shanghai interesting business expansion is not as fast as expected.
