Event: the company released its three-quarter report in 2018, with operating income of 5.648 billion yuan in the first three quarters, an increase of 27.62% over the same period last year, a net profit of 581 million yuan, an increase of 75.86% over the same period last year, and a non-net profit of 554 million yuan, an increase of 92.78% over the same period last year. Diluted earnings per share was 0.6 yuan.
Internet media and digital marketing business is growing rapidly, and the income structure is diversified. During the reporting period, the company's operating income maintained steady growth, mainly due to the rapid growth of Internet media business with Spigot as the core. In addition, the company's digital marketing business has also maintained steady growth. At the end of July, the company won the gold medal service provider of Tencent Social Advertising in the first half of 2018; in October, it won Tencent Advertising Marketing Service Line Breakthrough Marketing Award and iQIYI, Inc. 's "2018iJOY Entertainment Integrated Marketing Award". In addition, the company established Tibet Zhidu Insurance Brokerage Co., Ltd. on August 8 to enrich its business model on the basis of microfinance and factoring and promote the diversified development of the company's income structure.
The company's cash flow is stable and good, and it continues to increase investment in research and development. During the reporting period, the company's net operating cash flow was 125 million (- 236 million in the same period last year and 98.07 million in the first half of this year), and the company's cash flow continued to improve. It is mainly due to the substantial growth of the company's Internet business while strengthening financial management and optimization, although the increase in the lending scale of the Internet financial business has led to an operating cash flow outflow of 102 million, but Internet media business and digital marketing business have generated operating cash inflows of 228 million. In addition, the company continues to increase R & D investment, R & D costs increased by 90% year-on-year to 79.23 million yuan, enhance the company's technical strength to bear greater business demand.
Profit forecast: digital advertising and integrated marketing grow steadily, assuming that the company's business continues to progress steadily, and the EPS in 18-20 is expected to be 0.88,1.1,1.45 yuan respectively, maintaining the "overweight" rating.
Risk hints: acquisition integration risk, overseas market expansion risk, mobile business expansion risk less than expected, industry competition aggravating risk.
