Investment points: Maintain an “overweight” rating. The performance was slightly lower than expected, and the 2016-18 EPS forecast was lowered to 0.28/0.34/0.45 yuan (original value 0.4/0.44 yuan). The fixed increase will help the effective promotion of new investment projects, maintain a target price of 12 yuan, corresponding to 35 times PE in 2017, and maintain an increase in holdings rating. Operations grew steadily, and non-operating income increased performance. 1) 2016 H1 operations grew steadily, achieving revenue of 11.88 billion yuan (+3.46%) and operating profit of 56 million yuan (+1.19%). Large government subsidies (539 million yuan) and the disposal of own land in old factory areas (107 million yuan) increased profits. Net profit after deducting non-return to the parent was 541 million yuan (-39.25%). This was the first year-on-year decline in five years. Net profit after deducting non-current net profit of 43 million yuan (-18.59%) was mainly due to a sharp drop of 90.32% in non-current asset disposal profits over the same period; 2) Q2 revenue of 6.317 billion yuan (-9.66%), operating profit of 32 million yuan (+227.4%), the increase was mainly due to the same period last year Profit and loss, net profit 341 million yuan (-50.93%). Expense rates remained stable, and net interest rates declined over the same period. 1) The gross profit margin was 7.71% (-0.11pct), which was basically the same as during the same period; the gross margin of the traditional main business of military goods/civilian goods declined slightly, and the gross margin of trade and private brand operations increased; 2) The sales expense ratio was 1.96% (-0.1pct), which is due to the company's enhanced fee control, and the management/finance expense ratio was 4.65%/0.64% respectively, which is basically the same as during the same period. The net profit margin was 4.63%, down 3.17 pct from the previous year, mainly due to a sharp decline in net profit during the same period. A fixed increase will enhance capital strength and help upgrade the “superior two, strong three” strategy. The company's fixed increase project has been reviewed, and the capital raised will be used to build a terminal market network and launch multi-regional garden projects. Among them, Chongqing Jihuayuan is expected to be put into trial operation in the second half of the year. Approval of the fixed increase will help the company to carry out multi-channel marketing management with existing resources and accelerate business transformation and upgrading. Risk warning: Brand operation risks, new project construction falling short of expectations, etc.