The trio released its three-quarter report: Q3 revenue of 1.172 billion yuan (yoy -30.71%), net profit of 51.5473 million yuan (yoy -49.56%), which was lower than our expectations (0.08-0.1 billion). In Q1-Q3, revenue of 3.085 billion yuan (yoy -20.61%), net profit to mother was 0.182 billion yuan (yoy -43.15%), after deducting non-net profit of 0.161 billion yuan (yoy -48.79%). The impact on performance was mainly due to external environmental impact. We believe that future improvements in the economic environment will drive improvements in the company's fundamentals. The company will continue to improve its professional capabilities, actively explore new growth points, and maintain a “buy” rating.

The decline in performance was due to the weakness of the industry, and some advertisers reduced advertising

In 24Q3, revenue fell by about 31%, and net profit to mother fell by about 50%. Mainly due to the weak external environment and the tightening of advertisers' marketing budgets, advertising for some customers in the automotive industry and individual FMCG industry customers declined.

Q1-Q3's comprehensive gross profit margin was 17.52%, down 0.96pct. Sales/management/R&D/finance expenses were 7.58%/1.47%/1.23%/0.38%, respectively, compared with +1.53/+0.31/+0.28/ -0.2pct. The cost ratio increased during the period, mainly due to the decline in revenue.

Focus on the main business and continuously improve professional level and core competitiveness

The company continuously adapts to market changes, focuses on the main business, explores customer needs in depth around the core business, and continuously improves the team's professional ability and delivery quality. Strengthen business integration and collaboration capabilities, optimize integrated resources, strengthen incremental market layout, and promote the implementation of various major projects and new projects in an integrated manner. During the Olympics, the company placed Olympic-themed advertisements for customers such as Yili, China Resources Yibao, and China Radio and Television.

Actively invest abroad and explore new growth points

The company implements the strategy of “driving high-quality development with new productivity”, gives full play to its resource endowments, and leverages the resource advantages of leading customers and outstanding talents accumulated over many years to carry out diversified business layouts.

The company invested in the establishment of an advanced equipment manufacturing industry fund; China Resources Drinks, a key strategic investment project, was successfully listed on the Hong Kong Stock Exchange in October 24; reached a strategic cooperation with Hop Seng Innovation to operate the sports lottery and welfare lottery sales business of Beijing Super Hesheng Hui, and achieved impressive sales results. The company will promote its advantages through brand marketing, combine its high-quality customer resources and national layout advantages, and actively explore and seek more innovative sports lottery businesses.

Lower profit forecasts and maintain “buy” ratings

Based on the actual performance and operating conditions of Q1-Q3, we lowered the 24-26 digital marketing service business revenue and gross profit margin, and adjusted the 24-26 net profit forecast to 3.53/4.31/5.18 (previous value 4.83/5.75/6.36) billion yuan. Comparable to the company Wind, which consistently expected a 25-year PE average of 24X, considering some investment income in the company's performance, and given a certain degree of uncertainty, a certain discount. The target price was 36.54 yuan (previous value 27.24). Maintain a “buy” rating.

Risk warning: Macroeconomic pressure is under pressure, and market competition is fierce.