Revenue declined and losses intensified. The company achieved revenue of 6.87 billion yuan in the first half of the year, down 13.5% year on year, of which revenue for the second quarter was 3.53 billion yuan, down 4% year on year. Net profit attributable to shareholders of the parent company in the first half of the year was -195 million yuan, or -0.16 yuan per share, which is a significant decrease compared to the profit of 51 million yuan in the same period last year; of these, the loss in the second quarter was 118 million yuan, which increased compared to the first quarter (-77 million yuan). Net profit attributable to shareholders of the parent company after deducting non-recurring profit and loss was -200 million yuan. Market share declined and gross margin declined. The company's main television business achieved revenue of 5.1 billion yuan in the first half of the year, a year-on-year decline of 15.6%. The market share of retail sales volume fell 0.2 percentage points to 10.52% (Zhongyikang), widening the gap with leading companies. The gross profit margin for the first half of the year was 14.98%, down 0.64 percentage points year on year from a lower level, due to the company's lower manufacturing management, inventory management, and accounts receivable turnover capacity than its peers. The net profit margin on sales was -2.78%, down 3.54 percentage points from the previous year, mainly affected by the 3.59% increase in expenses during the period. Expenses and expenses are rigid, long-term borrowing has increased, and the rate of expenses has risen sharply during the period. In the first half of the year, the sales expense ratio rose 2.32 percentage points to 14.01%, and the management expense ratio rose 0.51 percentage points to 3.61%. On the one hand, it stemmed from the rise in labor and other costs. On the other hand, these two expenses were relatively rigid, and the decline in sales revenue pushed up the cost rate level. Losses were recorded in the first half of the year, but fixed asset investment continued, and long-term loans increased to 610 million yuan, causing the financial expenses ratio to rise 0.76 percentage points to 1.04%. Asset turnover is slow, and operating cash flow is tight. Operating cash flow of 5.54 million yuan was achieved in the first half of the year, an improvement from -1.97 million yuan in the same period last year, but it is still at a low level. The tight cash flow is mainly due to the continued slowdown in asset turnover. In particular, the number of accounts receivable turnover days rose sharply from 28 days to 48 days. risk factors. TV sales growth is slowing; industry competition is more intense; and the company's operating level is improving slowly. Profit forecast and investment rating: The company's operating results for the first half of the year show that the gap with struggling peers is widening. If the operating level continues to be weaker than its peers, it will cause a vicious cycle of declining revenue — rising expenses during the period — recording losses, and management improvements are expected. We lowered the company's 2011/2012 EPS forecast to -0.24/0.00 (the original forecast was -0.06/0.01 yuan) and raised the 2013 EPS forecast to 0.09 yuan (the original forecast was 0.02 yuan), maintaining the “hold” investment rating.