Main points of investment

What happened: the company released its three quarterly reports for 2016.

Comments:

And improve the performance of 16Q3. 1) the company's 16Q3 realized operating income of 1.46 billion yuan, an increase of 414% over the same period last year; net profit of 55.74 million yuan, an increase of 333% over the same period last year; revenue of 3.8 billion yuan from January to September 2016, an increase of 411% over the same period last year, and net profit of 123 million yuan, an increase of 760% over the same period last year, in line with market expectations (the company expects a net profit of 0.996-129 million yuan from January to September). 2) the growth of the company's performance mainly comes from the combination table created by Yutang (and the table time is in 2015Q4), on the other hand, the digital marketing companies except Guangzhou orange fruit perform well and improve the company's performance.

Collectivization management is carried out in an orderly manner. As a transformational company, the management actively promotes various businesses to be carried out in accordance with the company's strategy: 1) at the traditional business level, to improve the operating efficiency of ink chemical and forest chemical industries, and to cancel two forest chemical subsidiaries whose business is not developing smoothly; 2) at the new media business level, the company focuses on post-investment management and resource integration to enhance resource sharing and collaboration among subsidiaries. 3) in terms of management, new media managers participate in the core management of the group company, and the company sets up a Hong Kong subsidiary to prepare for overseas related business in the future, and collectivization management is carried out in an orderly manner.

Profit forecast and rating. It is estimated that the net profit of the company in 16-17-18 is 28120000 million yuan, EPS is 0.770.997plus 1.08 yuan respectively, and the corresponding share price PE is 41-32-29 times, if the higher-than-expected performance and the possibility of continuous extension transformation are taken into account, the valuation level is expected to further significantly reduce. 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.