Main points of investment

Event: the company released its mid-2016 report.

Comments:

Benefiting from the consolidation, the company's 2016H1 performance has increased significantly. 1) in the first half of the year, the company achieved an operating income of 2.35 billion yuan, an increase of 408% over the same period last year, and a net profit of 67.6 million yuan, an increase of 4474% over the same period last year, in line with market expectations (the company forecast a profit of 5300-68 million yuan). 2) the substantial increase in the performance of the current period is mainly due to the inclusion of Yutang Lianchuang and Beijing Youli in the scope of the consolidated statement, especially Yutang Lianchuang (Pingzhong interaction) contributed 54.04 million yuan in net profit, accounting for 80% of the net profit.

The overall development of digital marketing business is good. 1) the current digital marketing income is 1.909 billion yuan, accounting for 81.3%, and the gross profit margin is 9.78%, which has become the main source of profit for the company. 2) Yutang Lianchuang realized income of 179 million yuan and net profit of 54.04 million yuan; Beijing Zhichuang realized income of 92.84 million yuan and net profit of 16.88 million yuan; Beijing Youli consolidated one month, realized combined income of 17.35 million yuan and net profit of 5.38 million yuan; Guangzhou orange fruit lost 3.85 million yuan. The current performance of Yutang Lianchuang and Beijing Youli is in line with expectations.

Traditional business is stable. The revenue of the ink chemical industry in the current period was 164 million yuan, down 3.73% from the same period last year; the forest chemical business was 273 million yuan, up 12.71% from the same period last year, accounting for 11.63% of the income; and remained stable as a whole.

Profit forecast and rating. It is estimated that the net profit of the company in the 160.17 exam is 2.61 billion yuan, and the EPS is 1.04 yuan, respectively, and the corresponding share price PE is 28 times that of the corresponding stock. If the higher-than-expected performance and the possibility of continuous extension transformation are taken into account, the valuation level is expected to be further significantly reduced. Continue to be optimistic about the growth space of the digital marketing industry and the future extension growth of the company, and continue to maintain the "overweight" rating.

Risk hint: the synergy effect of M & A companies is not as expected; the macroeconomic downturn affects the marketing industry.