Key points of the report Event description The company released its 2016 semi-annual report. During the reporting period, it achieved operating income of 692 million yuan, an increase of 24.43% over the previous year; net profit attributable to the parent company was 384.847 million yuan, an increase of 55.08% over the previous year, achieving an EPS of 0.08 yuan. During the reporting period, the company terminated the major asset matter of a fixed increase in the acquisition of 100% of Huiyuantong's shares, and instead agreed to acquire 26% of the target shares at a value of 85.8 million US dollars. Incident review The performance in the first half of the year increased steadily, and the cross-border industry became a new growth point. In terms of the main stationery business, at the end of 2015, the company tried to promote “Kinbor”, an independent lifestyle brand in the domestic market, built an independent website, and opened flagship stores on various e-commerce platforms. It was very effective. Brand premiums gradually became prominent, compounded by the dividends of people's depreciation, and gross margin increased by 4.63 percentage points; although operating income fell 6.79 percentage points year-on-year due to the downturn in the stationery export industry, gross profit continued to grow close to 15%. In terms of the cross-border industry, Lingyun Media grew steadily, achieving revenue of 235 million yuan. Excluding the effects of the same period of the year for only 5 and 62 months, we estimate that the actual year-on-year growth rate during the reporting period should be around 6%. There is little problem with completing the net profit performance promise of 84.5 million yuan for the whole year; the imported cross-border e-commerce business progressed smoothly, achieving revenue of 62 million yuan and a gross profit margin of 11.29% in the first half of the year. During the reporting period, net profit attributable to the parent company increased by 13 million yuan, corresponding to a year-on-year increase of 55.08%, mainly due to the merger of Lingyun Media and the 8.75 million yuan government subsidies received by the company and Lingyun Media in the current period. Furthermore, since the actual delivery time of 26% of Huiyuantong's shares was in July, it did not contribute any profit during the reporting period. Entering the blue ocean market for cross-border payments, performance is expected to experience a blowout. Based on the steady growth of the stationery business, the company's layout in the cross-border industry deserves special attention. Among them, the cross-border payment industry chain built around “Huiyuantong” may become the next flashpoint. Since domestic third-party payment institutions have been involved in cross-border payment business for a short time, their comprehensive operating capabilities in overseas markets are weak, giving Huiyuantong a remarkable first-mover advantage. With the continuous landing of high-quality customers, entry barriers have gradually increased. This blue ocean market has huge potential for growth. Reiterate the recommended logic of Guangbo Co., Ltd.: 1. The 26% equity participation in Huiyuantong is an equity strategy under policy pressure, and the two parties have formed a deep bond. Under the premise that all conditions are met, the company will not rule out completing the acquisition of Huiyuantong's remaining shares; 2. The cross-border payment industry chain built around Huiyuantong is expected to become the next performance flashpoint. We believe that Huiyuantong's “mixed Chinese and foreign” background and rich experience in cross-border payment services will become its core competitiveness in expanding the depth and breadth of customers; 3. The impact of the Uber China and Didi Express merger Not sure, even next year After the cooperation is terminated, Huiyuantong also has the ability to continue to sign major customers. Risk warning: The acquisition target process did not meet expectations, and the signing of new customers fell short of expectations