Incident Company released its 2016 semi-annual report for the first half of 2016, achieving revenue of 926 million yuan, a year-on-year increase of 5.96%; realized net profit of 97.9173 million yuan, a year-on-year decrease of 34%; net profit of net income of 89.395 million yuan, a year-on-year increase of 9.8%; EPS of 0.085 yuan in the first half of the year, a year-on-year decrease of 34.11%; and achieved revenue of 456 million yuan and net profit of 42.94 million yuan in the single second quarter. Brief review Soy sauce revenue declined year on year, vegetable oil revenue achieved high growth. The company's revenue for the first half of the year was 926 million yuan, achieving a steady increase of 5.96%. Among them, soy sauce revenue was 486 million, down 2.16% year on year; vegetable oil revenue was 293 million, up 22.64% year on year. The revenue share of soy sauce and vegetable oil in the first half of the year changed from 53% and 29% at the end of 2015 to 51% and 30%, respectively. The share of soy sauce declined slightly and the share of vegetable oil increased slightly. The year-on-year decline in soy sauce revenue may be due to the pressure on revenue from the major single product “original brewing”. The company's two major single products, “fresh noodles” and “original brewing,” achieved revenue of 150 million and 40 million yuan respectively in 2015, and the revenue targets for the two major single products in 2016 were 200 million and 50 to 60 million respectively. Currently, it seems that “original brewing” has achieved revenue targets or pressure. The company has increased sales of vegetable oil, especially tea seed blended oil starting in the first half of the year, and is expected to maintain steady double-digit growth throughout the year. The year-on-year decline in net profit is due to a decrease in investment income and the increase in net profit after deduction slightly exceeding expectations. The company received investment income of more than 87 million in the same period last year. The first half of 2016 only received investment income of 7.78 million, a sharp decrease over the previous year, resulting in a sharp decrease in net profit of 34% over the previous year; while net profit after deducting non-return net profit in the first half of the year was 89.4 million, exceeding our performance report expectations by about 5%, the company's profitability was quite optimistic. There was a slight decrease in gross margin between new and old factories, and sales expenses declined slightly. The company's gross profit margin for the first half of the year was 27.8%, down 1.99 pct from the previous year. It is mainly due to the commissioning of new plants and the increase in upfront costs due to the replacement of new and old factories. We believe that the decline in gross margin is not a future trend; it is a reasonable response to the current stage of adjustment of the company's production capacity, and will not have a significant impact on gross margin in the long term. Furthermore, the company passed cost control in the first half of the year. In particular, sales expenses fell 17.5% year on year, mainly due to a drastic reduction in advertising expenses. The overall period cost rate was 15.15%, down 1.81 pct year on year, and the net interest rate was 10.2%. Profit forecasting and valuation companies have successively broken through production capacity bottlenecks and channel restrictions: currently with 300,000 tons of soy sauce production capacity, they are actively cooperating with university cafeterias for weak catering channels. This year, they are boosting the first and second tier supermarket channels. It is expected that there will be a significant increase in first-tier supermarkets by the end of the year. Considering that first-tier supermarket channels will contribute part of the revenue and maintain the 6.8% annual revenue growth forecast, 2016/2017 revenue was 1,874 million and 2.1 billion; considering the decline in net profit from the company in the first half of the year, the growth rate of non-return net profit in the first half of the year was 9.8%, and the cumulative unconfirmed loss of 8.73 million yuan in the first half of the year (equity law) in the first half of the year, Changsha Yunchu's equity investment may not be profitable in the short term; furthermore, considering that the company's entry into first-tier supermarkets has invested or increased sales expenses, the 2016/2017 net profit was adjusted to 168 million. 193 million, EPS is 0.15 and 0.17 yuan respectively, increasing the rating.