Core ideas:

The results in the first three quarters were in line with expectations, and the net profit doubled in the third quarter. The company announced its results for the first three quarters of 2018: operating income of 2.176 billion yuan, an increase of 37.24% over the same period last year, and net profit of 130 million yuan, an increase of 158.90% over the same period last year, corresponding to 0.33 yuan per share, consistent with the forecast range and in line with expectations. In the third quarter, revenue reached 1.003 billion yuan per quarter, an increase of 41.05% over the same period last year, and the net profit of returning home was 80 million yuan, an increase of 123.30% over the same period last year.

Driven by dual main industries, high growth is expected for the whole year. The company expects to achieve a net profit of 1.92-215 million yuan in 2018, an increase of 170% Mel 190% over the same period last year. The substantial increase in performance is due to: (1) with the company's adjustment to the export market and the impact of exchange rate changes and the increase in market demand this year, the income of the original industry has increased compared with last year; (2) the educational and cultural business has continued to grow with the Martian era and the newly acquired demon vision income. According to the promise of Kaimao Vision performance, the net profit of Kaimao Vision in 2018 is not less than 36 million yuan, the cumulative net profit in 2018 and 2019 is not less than 84.6 million yuan, and the cumulative net profit is not less than 150.21 million yuan. Judging from the current situation, with the growth of the film post-production industry, future growth is expected.

The company's gross profit margin has risen sharply. The comprehensive gross profit margin in the first three quarters was 24.34%, compared with 14.94% in the same period last year, an increase of 9.4 percentage points over the same period last year. In terms of expenses, the rates of sales expenses, management expenses and financial expenses were 7.19%, 9.47% and 0.26% respectively, up 3.04, 3.42 and-1.29 percentage points respectively from the same period last year. The company continues to increase its R & D investment, with R & D expenditure of 64.47 million yuan in the first three quarters.

The strategy is clear and the development momentum is strong. Relying on feed and feed raw materials, aquatic food processing, education and culture and other core business, the company has achieved steady growth. According to the development strategy, the company is actively looking for extension expansion, and has become the leading comprehensive supplier of tilapia food in China and the largest processing scale in the world; the business market of feed and feed raw materials is expanding, and the business variety is becoming more and more perfect. Since the acquisition of the Martian era in 2017, cutting into the creative culture and education sector, the layout effect has been gradually reflected, and the overfulfillment of the 2017 performance commitment has become the main growth point of the company's performance. In 2018, efforts will be focused on promoting the business layout of the Martian era, including online education, youth science and art education (STEAM), university cooperation, art study abroad and art travel, etc., to store momentum for future development.

Earnings forecast and rating: we expect the company's EPS to be 0.30,0.39 and 0.50 yuan respectively from 2018 to 2020, with a corresponding dynamic price-to-earnings ratio of 27 times, 21 times and 16 times respectively.

Risk tips: business development, product sales lower than expected risk, goodwill impairment risk and so on.