Incidents: Shenzhen Kangjia A (000016) announced the 2012 interim report. The company achieved sales revenue of about 7 billion yuan in the first half of 2012, an increase of about 3% over the previous year; realized net profit of 11.47 million yuan, an increase of 106% over the previous year; and achieved an EPS of 0.01 yuan, which is basically in line with expectations. Comment: Differentiated new products became the key net profit increased sharply year on year. In the first half of 2012, the company's domestic color TV business optimized the product structure, grasped the direction of smart cloud TV, vigorously launched differentiated products in the fields of 3D TV, smart TV, LED TV, etc., and continued to improve the product structure. Profitability was greatly boosted year over year, and gross margin increased to 19.36%. Flat-panel TV exports increased, and the company's export business actively adjusted its sales structure. Flat-panel TV sales increased sharply, and overseas market revenue increased 7% year on year. At the same time, intensive cultivation and efforts are being made to tap the potential of customers in traditional areas to ensure the stability of overall sales revenue. The Baidian business reflects the ability to control costs. In the first half of 2012, the company's Baidian business revenue was 720 million yuan, an increase of 9% over the previous year, and gross margin increased 3.6% month-on-month. Cost control continued to improve month-on-month. The company made improvements in cost control, and the cost rate improved month-on-month during the Q2 period. Risks suggest that black power competition is becoming incandescent, and channels are highly concentrated. Profit forecasts expect earnings of 0.17, 0.20, and 0.26 yuan per share for 2011, 2012, and 2013. Considering the company's future performance growth expectations and industry conditions, we think it is reasonable to give the company an “increase in holdings” rating based on 18 times PE in 2012.