Events:
The company's three quarterly reports show that the company achieved operating income of 2.817 billion in the first three quarters of 2017, an increase of 50.41% over the same period last year; net profit of 346 million, an increase of 33.59% over the same period last year; and earnings per share, an increase of 23.04%. Q3 revenue was 1.116 billion, up 27.29% over the same period last year. Q3's net profit was 160 million, an increase of 39.28% over the same period last year.
Core viewpoints
The decline in expense rate + Lima network consolidation table promotes performance growth, and the three major businesses make concerted efforts: the substantial increase in revenue and profit in the first three quarters of the company is mainly due to the steady growth of various businesses and the new Lima network consolidation table; at the same time, the expense rate has been effectively controlled and decreased to 16.95% (of which the sales expense rate is 7.93%, the management expense rate is 8.29%, and the financial expense rate is 0.73%. In terms of profit margin, the company maintained a stable gross profit margin of 32.04% and net profit of 12.11% in the first three quarters. The three core business sectors of the company's digital marketing, digital display equipment and digital outdoor network media are developing rapidly, in which digital display equipment benefits from the outbreak of the industry of small spacing LED equipment, with both volume and price rising. The extension M & An and endogenous development of the digital marketing plate were promoted in parallel. During the reporting period, Lima Network consolidation was added, as well as the acquisition of some shares in Blue Sea and 100% of AIP New Media. While thickening the company's performance, it is expected to establish synergy with the original target in terms of business and resources, and jointly promote the performance growth of the digital marketing sector of listed companies. Digital Outdoor sector, through the e-TSM outdoor media resource management system, the company has established a database of outdoor advertising media resources covering 13090 media owners, 56050 media resources and 1754.9 million media resources, covering 342cities across the country, and has become a national leading integration platform for own media resources and outdoor resources.
The strong logic of marketing integration remains unchanged, and employee stock ownership steadily shows confidence: we believe that in the medium and long term, the core logic of marketing sector to achieve industrial integration through mergers and acquisitions remains unchanged, and the development of global advertising leaders also confirms this logic. when marketing companies merge, they should also give full play to synergy and effective integration. Under the background of continuous expansion of M & A plate, higher requirements are put forward for the post-investment management and target integration of listed companies. The company carries out integrated management of its subsidiaries through standardized operation, "one committee and four departments" management platform and equity incentives to achieve sustainable development after the target enters the listed company. The company's employee stock ownership plan has progressed steadily. The previous repurchase of 45 million yuan has been taken as the shares of the first phase of the employee stock ownership plan, and the second phase of 195 million yuan has been completed during the reporting period, which will be used as the shares held by the second phase of employees. It is used to encourage the core management of the company and its subsidiaries, to express the management's confidence in the follow-up stock price trend and to encourage core backbone talents. On the other hand, during the reporting period, the CSRC approved the public issuance of 2 billion corporate bonds by listed companies, which is expected to enhance the company's financial strength and optimize the leverage structure.
Profit forecast and valuation: the forecast company will achieve net profit of 6.02,7.4 and 888 million yuan from 2017 to 2019, with corresponding EPS of 0.98,1.21,1.45 yuan per share respectively, and corresponding pre-valuation PE of 19.6,16,13.3 times respectively, maintaining a strongly recommended rating.
Risk tips: betting performance is not up to expectations, integration risk, LED business development is not smooth.
