Event: in 2017, the company achieved an operating income of 4.187 billion yuan, an increase of 9.56% over the same period last year, and a net profit of 231 million yuan, an increase of 63.25% over the same period last year. Diluted earnings per share was 0.75 yuan. Cash dividend of 1.1 yuan (including tax) shall be distributed to all shareholders for every 10 shares. In the first quarter of 2018, the company achieved operating income of 1.401 billion yuan, an increase of 99.14% over the same period last year, and a net profit of 97.2 million yuan, an increase of 82.68% over the same period last year. In the first half of 2018, the company expects to achieve a net profit of 162 million-230 million, an increase of 20% and 70% over the same period last year.

Take the content as the center, continuously increase the content marketing business. During the reporting period, the company continued to launch variety shows and launched a self-made original street interactive challenge talk show "True Star Great Adventure". At the same time, Simei has jointly produced high-quality TV dramas such as "my first half of my Life". In addition, the company completed the acquisition of 100% shares in Zhangwei Technology, 100% shares in Quan Da Film and Television, and the remaining 20% shares in Keyi Media, covering digital reading, TV drama planning, production and distribution, variety shows and TV series promotion, commercial brand integrated marketing and content production and other business types, improving the company's layout in the field of content marketing, and the gross profit margin of the company's content and content marketing business increased to 30.9%. With the further improvement of advertising quality and creative requirements of advertisers, the content marketing section is expected to become the most potential business segment of the company.

Internet advertising is growing steadily, and the superior gross profit margin continues to rise. Benefiting from the steady growth of the digital marketing industry, the company's Internet advertising revenue reached 1.933 billion yuan, an increase of 53.21% over the same period last year, and will continue to develop into comprehensive Internet marketing services in the future. During the reporting period, the company adjusted the organizational structure and business of the outdoor media business sector to eliminate the advantages and disadvantages, so that the gross profit margin of the sector increased to 14.16%. In addition, the company's television advertising business and other traditional media businesses have shown a continuous decline, but the rate of decline has slowed.

Profit forecast: the advertising industry as a whole rebounded, the traditional advertising market stopped falling and rebounded, and the digital marketing and content marketing industries continued to grow. Assuming that the company's business continues to make steady progress, it is estimated that the EPS for 18-20 years will be 0.86yuan, 1.06yuan and 1.24yuan respectively, giving a "overweight" rating.

Risk hint: acquisition integration risk, industry competition aggravates the risk.