Key points of investment

Incident: The company released its 2016 three-quarter report.

Comment:

The 16Q3 results were in line with expectations. The company achieved revenue of 980 million yuan in 16Q3, an increase of 23.4% over the previous year; Guimu's net profit was 61.07 million yuan, an increase of 62.5% over the previous year; Guimu's net profit from January to September 2016 was 2.53 billion yuan, an increase of 3.76% over the previous year, and Guimu's net profit was 126 million yuan, an increase of 12.9% over the previous year, in line with our expectations...

Both endogenous growth and epitaxial expansion showed impressive results. 1) In terms of endogenous growth, the new media PR business represented by Diss Media grew rapidly, and the first three quarters of big data marketing added in 2016 also achieved revenue of 56.63 million yuan; 2) In terms of outreach expansion, the company's M&A fund has signed an equity transfer agreement with Smaato, an outstanding SSP company in the US, and Kaiming Fashion (YOKA) also completed business changes on September 28, and the “content marketing+digital marketing” dual drive continues to develop.

Profit forecasts and ratings. The company's net profit for the 2016/17/18 exam preparation was 200/2.38/278 million yuan, and the EPS was 0.29/0.35/0.41 yuan. The current stock price corresponding to PE was 41/34/29 times respectively, and the current market value is about 8 billion yuan. The company currently has five major business groups: digital marketing, experiential marketing, content marketing, big data marketing, and PR advertising. A comprehensive marketing layout has been formed; we are optimistic that the company will strengthen its layout and improve its own business structure in content marketing and international digital marketing represented by influencers. Maintain an “increase in holdings” rating.

Risk warning: M&A integration falls short of expectations; macroeconomic decline.