The increase in operating income was in line with expectations, and the loss of net profit narrowed. In the first half of 2016, the company achieved operating income of 182 million yuan, an increase of 36.02% over the previous year, and net profit attributable to shareholders of listed companies - 11.7 million yuan, a decrease of 4.35% over the same period last year. The company invested 28.09 million yuan in R&D in the first half of 2016, an increase of 33.83% over the previous year. As the company increased R&D investment and management expenses increased dramatically, the company's net profit loss narrowed to a limited extent. The three main businesses are developing steadily, and performance may have reached an inflection point. In the first half of 2016, the company increased its product development and marketing efforts, which led to a year-on-year increase of 32.06% and 22.09% in management expenses and sales expenses, respectively. The company's three major businesses, food distribution traceability, file informatization, and political and legal informatization, have developed steadily. They all maintain their position as industry leaders and continue to develop new market segments. The company won a total of nearly 200 million yuan in bids from January to July this year, an increase of about 220% compared to the 88 million won in the same period last year. Among them, food traceability won nearly 110 million yuan, and performance may have reached an inflection point. Set up “Picky Cat”, food traceability and layout the entire industry chain. The company is a leading enterprise in the field of food traceability, with a market share of about 40%. With its long-accumulated experience in food traceability platforms, the company has achieved the extension of food traceability ToG to ToC and development, pioneered a new business model, and opened up new performance space for the company, using “scavenging cat” as an entry point. At present, the company's food traceability has opened up the entire industry chain, and achieved the layout of the entire industry chain from food cultivation, breeding, production and processing to food sales. Furthermore, the company recently successfully won the bid for the “Shenyang Meat and Vegetable Circulation Traceability System Construction Pilot (Phase I) Integrated Package” project. The 10 billion level market that earns the “13th Five-Year Plan” food traceability ahead of schedule will benefit from the establishment of a food traceability system that will gradually spread from pilot cities to thousands of counties and cities in the future. Investment suggestions: The company continues to increase R&D investment and marketing efforts, and the three main businesses of food circulation traceability, file informatization, and political and legal informatization are developing steadily. The establishment of “Chaikai Cat” enabled the extension of food traceability ToG to ToC and helped it open up the entire food traceability industry chain. The company's 2016-2017 EPS is expected to be 0.78 and 0.98 respectively, maintaining the “buy-A” rating, with a target price of 120 yuan for 6 months. Risk warning: The operation of Taocai Cat fell short of expectations, and the implementation of the national food traceability policy fell short of expectations.