The company issued a performance forecast. Net profit attributable to shareholders of listed companies for the full year of 2018 is expected to be 86-980 million yuan, an increase of 118.36%-148.34% over the previous year. Of this, the impact of non-recurring profit and loss was approximately RMB 8.5 million. Key points supporting the ratings The company's overall operating performance is in line with expectations. The company officially completed the overall merger and acquisition of Outfit7 in April 2018, and the results were completely consolidated. During the reporting period, all of the company's subsidiaries operated well and met the annual performance assessment target. The company's overall net profit for the fourth quarter was 104-222 million yuan, which was between -48.5% and 9.9% compared to the third quarter. Since the third quarter was summer vacation, the profit period for the company's game products was the peak profit period for the company's game products, there was a compound forecast of a month-on-month decline in the fourth quarter. The company's products are operating well and have not been affected by the suspension of the version. During the reporting period, Outfit7's “The Talking Tom Family” series was not affected by the domestic version policy due to the characteristics of its global operation. According to the latest data, the cumulative number of downloads of this series of products exceeds 9 billion, the number of monthly active users exceeds 350 million, and the number of daily active users has reached 40 million. After launching on November 9, “My Tom Cat 2” ranked first in AppStore download lists in many countries and regions. Interest expenses on M&A loans have a certain impact on the company's net profit. Outfit7's merger and acquisition project brought the company an additional loan of about 3 billion yuan. According to the latest data, the company added interest-bearing debt of about 3.4 billion yuan in 2018. The interest expenses generated by this part of the debt reduced the company's net profit level to a certain extent. The main risk faced by ratings The company's product performance fell short of expectations, and the growth rate of the global Internet advertising industry slowed down. The valuation company currently operates steadily in all businesses, and the operating performance of the acquired subsidiaries has met performance promises; the “Tom Cat” series produced by Outfit7, which was acquired by the company, has always maintained a very high number of monthly active users and downloads in the global market, and its core competitiveness has not weakened. In addition, the company's 2018 performance has been fully tested for impairment. We believe that the company can maintain a good level of performance growth in the future. At the same time, considering the impact of interest expenses on the company's net profit, we will make certain adjustments to previous profit expectations. The company is expected to achieve earnings of 0.49, 0.60 and 0.73 yuan per share in 2018-2020, corresponding to the price-earnings ratio of 13, 11, and 9 times the current stock price, respectively, maintaining the company's buying rating.