According to the company's annual report, the revenue in 2017 was 470 million yuan, an increase of 20.7 percent over the same period last year, and the net profit was 40.98 million yuan, an increase of 23.1 percent over the same period last year. Of this total, 17Q4 achieved revenue of 135 million yuan, an increase of 23.7 percent over the same period last year, and a net profit of 10.01 million yuan, an increase of 42.6 percent over the same period last year. It is proposed to pay a cash dividend of 0.29 yuan (including tax) to all shareholders for every 10 shares. It is estimated that net profit in the first quarter of 18 is up 30% and 60% compared with the same period last year, and revenue is expected to increase by 22%.

Support the main points of rating

Piano manufacturing business returns to growth. The company sold 35117 pianos, an increase of 4349 over the same period last year, of which 33511 upright pianos, an increase of 14.5 percent, a year-on-year increase of 3.5 percent, and 1606 grand pianos, an increase of 7.8 percent and 7.1 percent. In terms of marketing, the company has continuously improved the influence of the brand through holding dealer promotion meetings, network marketing promotion, concert, master class, piano competition and other promotion activities. The company and Walt Disney Company jointly developed Helen Walt Disney Company series of pianos. Walt Disney Company animation image into piano modeling. Therefore, the company in the overall domestic sales of first-hand piano is not smooth, to achieve a resumption of piano business growth.

The smart product goes online smoothly. The company actively promotes "631" intelligent piano classroom, which combines Walt Disney Company animation intelligent piano APP course and Vienna University of Music and Performing Arts teaching method to realize the sales of 137 sets of intelligent piano classroom products. At the same time, the company launched intelligent piano I piano1, which is a modern piano with traditional piano music functions and modern technology, equipped with intelligent hardware, mute system and special APP to further upgrade the intelligent mode of piano distance teaching and self-study.

Art training business M & A restart. Since 2014, the company has expanded its art education and training programs and operates through cooperation agreements with local training institutions, including art enlightenment, music education, art education and dance education. During the reporting period, through the dividends of the invested projects, the investment income was 2.92 million yuan, accounting for 7.1% of the net profit. In January 18, the company acquired 38.89% of the shares of Ningbo Helen Seven Color Culture in cash, and the share share increased to 49%. The target is the most profitable in the company's cooperative art training project. Through two years of investigation and exploration, the company has a deeper understanding of the art training industry, which can be seen as the beginning of a new stage of the company's layout in the art training industry. With the growth of the invested project itself and the increase of the company's shareholding, the contribution of 18 years of art training to profits is expected to continue to increase.

Main risks faced by rating

The merger and acquisition of art training business is not smooth, and the piano manufacturing business is declining.

Valuation

The company's traditional business has resumed steady growth, art training mergers and acquisitions have been launched again, and the layout in the field of art training in the past 18 years is worth looking forward to. We expect earnings per share in 2018-20 to be 0.20,0.25,0.30 yuan, an increase of 26%, 20% and 23% over the same period last year. The current stock price is rated as overweight corresponding to 18-year PE40.7X.