Performance declined, and the company experienced a painful period of transformation. In the first half of 2016, the company achieved operating income of 581 million yuan, a year-on-year decrease of 19.88%; realized net profit attributable to shareholders of listed companies of 32 million yuan, a year-on-year decrease of 45.83%. The reason for the decline in operating income and net profit is that the Internet lottery business for people in Australia has not resumed due to policy, and has not yet generated revenue, but development and operation matters are still going on normally, personnel expenses are still being incurred, and the cost reduction is not obvious; furthermore, in this period, due to the sale of some shares of micro-screen software with a high gross margin, People's Online lost control of the company, and revenue declined due to a reduction in the scope of the merger. The central authority portal still has the same influence. As the online media owned by the People's Daily, which is ranked first by the central news organization, it has authority and brand advantages unmatched by other websites. Currently, from traditional media to Internet media to self-media, the entire social environment is quite complicated, and the Internet is filled with a large amount of false information. People's Online has always adhered to the authoritative, credible, and popular purpose of running a network, promoting the main theme and spreading positive energy. It is the core representative of mainstream media websites in China. This kind of brand influence will highlight its increasingly important credibility value in the increasingly complex media field. Furthermore, in the first half of 2016, People's Online made careful preparations and completed the revision of the “People's Online, the Communist Party of China News Network, and Mobile People's Online”, seeking to open up the content, technology and human resources of the two platforms, using the PC side as the base base, and the mobile terminal as the frontier position, optimizing services, enhancing experience value, and laying the foundation for future benefits. The lottery industry has broad prospects, and the business for Chinese and Australian customers is yet to start. People's Online is owned by People's Online. Combined with its market popularity and influence, it is an Internet lottery platform ranked second in the vertical field after 500 Lottery. In July 2016, People's Online won a bid for an Internet lottery promotion project of 5.18 million, and expectations for the launch of a new round of lottery business were opened. However, due to policy reasons, the People's Online lottery business did not restart in the first half of this year, resulting in no profit being generated in the first half of 2016. At the same time, People's Online has been preparing for lottery player interaction, community maintenance, and promotion of activity. Once the policy is liberalized, the benefits of the lottery business can quickly become apparent. Profit forecast and valuation: We expect the company's EPS from 2016 to 2018 to be 0.23/0.29/0.33 yuan. Referring to comparable companies in the same industry, it is also expected that the company's lottery business will quickly bring rich profits after starting, giving it a “increase in holdings” rating of 95 times the 2016 dynamic PE and a target price of 21.85 yuan for 6 months. Risk warning: The advertising business continues to decline, and the lottery business policy risks.