In 2018, the company achieved an income of 12.115 billion, an increase of 7.26%; a net profit of 186 million, a turnround to a profit, an increase of 200.99%; a net profit of 123 million, an increase of 132.48%; and a net cash flow of 550 million from operating activities, an increase of 55.89%.

The company's performance turned from deficit to profit mainly due to the 18-year impairment loss of assets. The company set aside 280 million of the impairment provision for assets in 2018, accounting for 84.14% of the total profit, mainly due to the provision of 191 million of the impairment of long-term equity investment and 77 million of the impairment provision for goodwill. The provision for impairment of goodwill in 18 years has been basically controlled, while the impairment loss in 2017 has reached 682 million, of which there are 468 million provision for bad debts and 197 million provision for impairment of goodwill. The proportion of the company's asset impairment reserve to the company's total operating income has dropped from 6.04% in 2017 to 2.31% in 2018. There is a common phenomenon of capital advance in the advertising industry, so the receivables in the industry are generally high, and the financial pressure of small and medium-sized advertisers is increased. the extension of the settlement cycle of some businesses makes the company's payback cycle grow, resulting in corresponding asset impairment, and the 18-year impairment loss is mainly due to capital advances for customers. In 19 years, the company will be more cautious in advance, and the impairment risk of the company is expected to be effectively controlled as the economy picks up.

The GIMC cloud platform was officially launched, and a series of big data products were put into commercial operation. The company's net profit rate is 2.09%, the expense rate is well controlled, maintaining around 9%, and the company's comprehensive gross profit margin is 14.4%, raising 2.19pct, mainly due to the pick-up of media agency business. The company's two core business media agents and digital marketing revenues are 6.111 billion (+ 0.58%) and 5.111 billion (+ 16.34%), respectively, and gross margins are 7.35% and 16.39%, respectively, increasing 3.83pct and 0.25pct respectively. In the future, the company has great potential for the growth of digital marketing business. With the help of big data technology and customized marketing products, Shengguang will open up the full marketing link and constantly tap the business growth point of a single customer. In July 2018, the GIMC cloud platform was officially launched, with a series of standardized products successively put into commercial operation, indicating that with the enabling of big data's technology, the company will accumulate many years of practical experience in marketing and quickly transform it into the core competitiveness of digital marketing.

Profit forecast: with account collection and industry bottoming out, there is still room for the company's performance to rebound. The company's 2019-2021 net profit is expected to be 402 million, 455 million and 554 million respectively, an increase of 116.3%, 13.21% and 21.6% respectively. EPS is 0.23,0.26 and 0.32 yuan, respectively, according to the stock price on April 18, corresponding to 17 times, 15 times and 12 times respectively, maintaining the buy rating.

Risk tips: industry competition risk; brain drain risk; asset impairment risk.