Guide to this report: Performance is slightly lower than expected. A fixed increase will enhance capital strength, promote the company's terminal market network construction and the development of the Jihuayuan project, maintain the target price of 12 yuan, and maintain the holdings increase rating. Investment Essentials: Maintaining an “Overweight” rating. The performance was slightly lower than expected, and the profit forecast for 2016-18 was lowered to 0.28/0.34/0.45 yuan (original value 0.4/0.44 yuan). The fixed increase will help the new investment project to advance effectively, maintain the target price of 12 yuan, corresponding to 35 times PE in 2017, and maintain an increase in holdings rating. Business grew steadily, and non-operating income increased performance. 1) 2016H1's 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) and disposal of owned land in the old factory area ($107 million) increased profits, with net profit of 541 million yuan (-39.25%), the first year-on-year decline in five years, net profit after deducting net profit of 43 million yuan (-18.59%). The decline in profit during the same period last year was mainly due to a sharp drop of 90.32% in profit from disposal of non-current assets during the same period; 2) Q2 revenue of 6.317 billion yuan (-9.66%) and operating profit of 0.32 million yuan (+227.44%). loss , net profit of 341 million yuan (-50.93%). The expense ratio remained stable, and the net interest rate declined during the same period. 1) The gross profit margin was 7.71% (-0.11pct), which was basically the same as 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 expenses ratio was 1.96% (-0.1pct), which strengthened the company's fee control. The management/financial expenses ratio was 4.65%/0.64%, respectively, which was basically the same as the same period. The net profit margin was 4.63%, down 3.17pct year on 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 “Excellent Two Strong Three” strategy. The company's fixed increase project has been reviewed, and the funds raised will be used to build a terminal market network and launch multi-regional Jihuayuan projects. Among them, Chongqing Jihuayuan is expected to be put into trial operation in the second half of the year. The approval of the fixed increase will help the company use existing resources to carry out multi-channel marketing management and accelerate business transformation and upgrading. Risk warning: brand operation risks, new project construction falling short of expectations, etc.