Main points of investment

Event: the company announced that in the first quarterly report of 2016, the company achieved operating income of 465 million yuan, an increase of 64.42% over the same period last year, and a net profit of 41.3124 million yuan for shareholders of listed companies, an increase of 74.24% over the same period last year.

Comments:

The rapid growth of net profit is mainly due to the consolidation of advertisements, which accounted for 45.44% of the company's net profit in the first quarter, reaching nearly 20 million. It is estimated that the net profit contributed by the interconnection of the capital is about 15 million. As the second half of the year is generally the main source of performance for mutual public and capital, we are still optimistic about the company's performance for the whole year.

The company's net interest rate rose slightly, and the share of three fees in revenue was basically flat compared with the same period last year. The gross profit margin and net profit margin in the first quarter were 23.45% and 8.89% respectively, which increased by-0.8% and 0.5% respectively over the same period last year. The proportion of sales expenses, administrative expenses and financial expenses to revenue decreased by-0.24%, 0.6% and-0.33% respectively compared with the same period last year.

The company has comprehensively carried out communications + Internet transformation, while continuing to grow, the Internet extension expansion strategy is also constantly advancing: the outbreak of SMS demand of customers of enterprises benefiting from information services is expected to maintain a high annual growth rate of 30%. The business progress of traffic operation will be the next growth flashpoint of the national capital. Digital marketing business benefits from the rapid growth of the programmed purchase advertising industry, and is expected to achieve compound growth of more than 50% in the next few years.

Profit forecast: in the short term, the consolidation effect will promote the explosive growth of the company's performance, and the rapid growth of enterprise text messages and digital marketing business will promote the company's compound high growth in the next few years; in the long run, the company's Internet transformation strategy will continue to advance. Due to the 15-year performance slightly lower than expected, we downgraded the company's 16-18 EPS to 1.02,1.36,1.70 yuan to maintain the "buy" rating!

Risk hint: the competition of enterprise SMS is intensified and the growth rate is lower than expected; the development of SSP industry is not as expected