I. Overview of events

In 2018, the company achieved operating income of 3.134 billion yuan, an increase of 30.89% over the same period last year, and its net profit was 57.1406 million yuan, down 49.52% from the same period last year. The sharp decline in net profit is mainly due to the reduction of 222 million yuan in goodwill in the Martian era. 2019 Q1 achieved an operating income of 552 million yuan, an increase of 9.05% over the same period last year, and a net profit of 7.3364 million yuan, a decrease of 45.52% over the same period last year. This is mainly due to the decrease in valid orders of participating enterprises and an increase in losses in some campuses of the education business.

II. Analysis and judgment

The scale of the digital entrepreneurial industry continues to grow, and the leading enterprises of digital art education are expected to fully benefit the rapid development of the scale of the digital industry, driving up the demand for games and film special effects production. In 17 years, China's e-sports game market has benefited from the rapid growth brought about by the outbreak of Mobile e-sports games. It is expected that the market size of Mobile e-sports games will reach 13.8 billion yuan in 2019. In the past 18 years, the box office of domestic films was 37.897 billion yuan, up 25.89%, accounting for 62.15% of the total box office and 8.31%. The number of moviegoers and the number of screens continued to grow. The market scale of the film and television industry continues to grow, and the corresponding demand for film and television post-production talents and film and television post-production demand will also continue to increase. Mars Age, as a leader in digital art education, is expected to fully benefit from the continued growth brought about by the growth of digital creative industries, and play its synergy with the Martian era in the field of business. the company's business scale and profitability will also be enhanced.

The production and sales volume of agricultural products related business is expected to continue to grow, and the planned acquisition of Nippon Ocean is expected to increase profits. According to the data of China's feed industry and the National Bureau of Statistics, China's feed industry has developed steadily, and the total annual output of finished feed has increased by 0.31% in 18 years. After years of market tests, the company's feed products have high popularity and brand influence. And in recent years, the company's feed and related production capacity has been increasing, and the coverage area of the products has been extended to Guangdong and other places. With the further release of production capacity in the future, it is expected that the production and sales of the company's related business will continue to grow in the next few years. The company announced in January 2019 that it plans to acquire 66.25% of Nippon Ocean and 75.29% of Xiangheshun in Guangxi. Among them, the net profit of Rikuhai Ocean in 2018 was 784.6565 million yuan, while that of Xiangheshun in Guangxi excluding the disposal loss of fishing vessels in 2018 was 20.5227 million yuan. After the completion of the acquisition, the seafood acquisition of Rikuhai Ocean and the offshore fishing business of Xiangheshun in Guangxi will supplement the raw materials of the company's aquatic products business to a certain extent. at the same time, it benefits from the original cost advantage brought by Mauritania's non-rich fishery resources and lower labor costs. It is expected that in the future, it will promote the operation scale and comprehensive profit level of the company's agricultural products-related business to a certain extent.

III. Investment suggestions

Cover for the first time, give cautious recommendation rating. We believe that the company has a high market reputation and influence in the agricultural business, and the planned acquisition of the two companies will bring raw material replenishment and cost advantages to a certain extent. The company has been involved in the field of digital art education since 17 years. With the rapid growth of the overall market size of the industry in the past 19 years, the performance of Mars era and Kaishi Vision is expected to usher in new growth and fulfill its 19-year performance commitment. Therefore, the EPS given to the company from 2019 to 2021 is 0.67 EPS 0.81 Plus 0.97, and the PE corresponding to the current price is 11X/9X/8X. Compared with the median 2019PE of listed companies in the same industry is 25X, the valuation of the company is at a low level in the industry, and considering the steady rise in demand in the two main industries of the company, the performance of the company is expected to improve and be cautiously recommended.

Fourth, risk tips:

Downstream demand is lower than expected, and Martian era performance promises cannot be fulfilled.