1H10 performance was in line with expectations: the company achieved operating income of 1 billion yuan in the first half of the year, down 8% year on year; realized net profit of 89.3 million yuan, corresponding to earnings per share of 0.09 yuan, down 11% year on year, in line with expectations. The main reason for the decline is that Xinmin Media's advertisements are no longer consolidated and that operating and management expenses are high. Positive: Book distribution revenue increased 8% year over year. During the reporting period, the company added total distribution rights for secondary vocational schools in Shanghai, bringing book distribution revenue to 390 million yuan, an increase of 8% over the previous year. Invest in the establishment of a digital publishing business company. In June 2010, the company formed a joint venture with Jiefang Newspaper Group, the majority shareholder, and Shanghai Edio to launch its own brand “Yimo” reader and the online digital content distribution platform “Xinhua e-Store”, laying the foundation for the company's transformation to digital publishing. Negative: Newspaper business revenue fell 12%. Although there has been an increase in some of the company's newspaper advertisements, since Xinmin Media advertising only began unconsolidated statements in April 2009, the company's current newspaper business revenue reached 460 million yuan, a decrease of 12% over the previous year. Expenses for operating and management expenses are high. In the reporting period, the company spent 180 million yuan on sales expenses and 53.6 million yuan on management expenses. Together, the two accounted for 23.8% of operating income, a significant share. Development trend (1) In the second half of the year, the company's book distribution and newspaper advertising business are expected to remain stable. (2) The company's strategy has been officially upgraded to digital publishing, and the “Yimo” terminal and the “Xinhua e-shop” online digital distribution platform have been launched. The sales volume of terminals and the speed of digital content construction are worth focusing on. Valuation and recommendations: The profit structure has been adjusted, but the company's earnings of 0.24 yuan and 0.26 yuan per share in 2010-2011 remain unchanged. The current stock prices corresponding to the 2010-2011 PE are 38x and 35x respectively, which is in the middle of the media sector valuation, and has maintained a neutral rating for the time being. The subsequent stock price catalyst was the administration of digital copyright and the issuance of digital publishing licenses by the Board, and the investment risk was the slow development of the company's digital publishing business.