The company released its semi-annual report. In the first half of 2016, it achieved revenue of 692 million yuan, an increase of 24.43% over the previous year; net profit of 38.48 million yuan, an increase of 55.08% over the previous year; and net profit after deduction of 30.65 million yuan, an increase of 119.83% over the previous year. Key points supporting ratings The construction of multi-level channels has promoted the development of the main stationery business, and the cross-border e-commerce business has started well. In the first half of the year, the company's stationery revenue was 392 million yuan, a year-on-year decrease of 6.79%, but gross margin increased by 4.63% to 24.66%. The company vigorously develops e-commerce channels such as JD and Tmall, expands export opportunities, and begins preparations for platforms such as Amazon and AliExpress to carry out cross-border e-commerce exports, and actively cultivates fashion stationery projects. Diversified marketing and channel expansion will help enhance the profitability of the main stationery business in the future. The company established Global Shopping in May last year and entered cross-border e-commerce. In the first half of this year, it achieved revenue of 61.99 million yuan, gross profit margin of 11.29%, and a smooth start. Excluding Lingyun Media's profits, the main stationery business and cross-border e-commerce reached a total of 7.15 million yuan in the first half of the year, and there is a trend of further improvement in the future. The profit model of Lingyun Media has diversified and developed, and its performance is in line with expectations. In response to the current situation where competition in the industry is becoming more and more transparent, Lingyun Media promptly adjusted its strategy, actively expanded new models such as cutting off resources and sharing of intermodal transportation on the basis of a simple agency model, and formed a more professional advertising and sales team for major customers. In addition, the company's mobile business has also achieved high growth. In addition to the original positioning of a one-stop beauty and fashion information website, it will also actively expand VR and influencer business, and its business model will become more diverse. In the first half of the year, Lingyun Media achieved net profit of 31.33 million yuan. Due to the seasonality of the Internet marketing industry, performance in the second half of the year was generally better than in the first half of the year. We expect the company to probably achieve a promised profit of 84.5 million yuan for the whole year. The merger of Uber and Didi will not hinder Huiyuantong's long-term growth, and new customers will offset the negative impact. The company participated in 26% of Huiyuantong's shares, and Ningbo Rongchang (a company established by the partner in a joint venture with Guangbo's management) jointly held 51% of Huiyuantong's shares, maintaining control. The merger of Uber China and Didi has caused the market to worry about Huiyuantong's performance, but we believe that cross-border payments are an emerging industry. In the process of rapid development of the industry, more potential high-quality customers similar to Uber will emerge. Huiyuantong has a cross-cultural and cross-regional background and one-stop payment solution capabilities, and is capable of seizing opportunities to spread the risk of customer concentration. In the short term, the company is also actively developing a large number of new customers to offset this negative impact. In addition, Huiyuantong is also actively deploying blockchain technology and is expected to become a pioneer in this field in China. The main risk faced by ratings Huiyuantong's new customer development falls short of expectations. Valuation companies strive to improve the profitability of their main business and actively expand into the field of cross-border e-commerce services. The company maintains control over Huiyuantong. If it can launch a wholly-owned acquisition of Huiyuantong this year, the net profit for exam preparation will reach 300 million yuan. The current stock price is 37 times the price-earnings ratio corresponding to 2016. Assuming that the acquisition of Huiyuantong's remaining shares was completed in 2017 at the ratio of the original increase plan, according to the diluted share capital, we expect earnings per share for 2016-2018 to be 0.25, 0.69, and 0.89 yuan/share, respectively, maintaining the target price of 24.50 yuan and maintaining the buying rating.