Event: The company announced its 2016 mid-year report. In the first half of the year, the company achieved operating income of 581 million yuan (+16.45%), net profit of 404 million yuan (-2.42%), net profit of 370 million yuan (-4.58%), basic EPS of 0.3888 yuan (-2.41%), and a weighted ROE of 8.45% (-1.35 pct). Comment: 1. The decline in profit of Dongguan Securities dragged down performance. The performance of the main business exceeded expectations. In the first half of 2016, the company's main business grew steadily, achieving toll revenue of 478 million yuan (+8.48%), net profit of 231 million yuan (+45.63%), and net profit accounting for 57.17% (+18.86pct). The financial leasing business maintained rapid growth. In the first half of the year, it achieved operating income of 91 million yuan (+101.34%), net profit of 43 million yuan (+73.50%), and net profit accounting for 10.64% (+4.66pct). In the first half of the year, it achieved investment income of 141 million yuan (-43.09%), contributed net profit of 130 million yuan (-43.62%), and accounted for 32.19% (-23.52%) of net profit. The reporting period was affected by a sharp decline in various businesses in the securities industry as a whole, which led to a sharp decline in investment income contributed by associated companies. However, the steady development of the main business (highway operation and financial leasing) made up for the impact of the decline in investment income. The company achieved net profit of 404 million yuan in the first half of the year, a drop of only 2.42%. 2. The quality of road production is high, and the growth rate is faster than the industry average. The company's road production includes the Guan-Shenzhen Expressway Phase 1 and 2, the Dongcheng section of Phase III, and the Longlin Expressway, and is also entrusted with the management of the Guan-Shenzhen Expressway Phase III Shijie section, with a total mileage of about 61.26 kilometers. The Guan-Shenzhen Expressway is located in the hinterland of the Pearl River Delta. It is an important part of the Guangdong Pearl River Delta Ring Road Expressway, and has become an important fast track connecting Guangzhou, Dongguan and Shenzhen. The company also participated in 11.11% of Humen Bridge's shares (including investment income). 3. The financial leasing business performed strongly, and the share of revenue increased the company's wholly-owned subsidiary, Rongtong Leasing, laying a good foundation for the company's transformation into big finance. Currently, the company mainly engages in financial leasing business in the fields of transportation, infrastructure, buses, ports and terminals, and manufacturing enterprises in the form of direct leasing, after-sales and leaseback. During the reporting period, the financial leasing business achieved operating income of 91 million yuan (+101.34%), gross profit of 64.94 million yuan (+85.01%), and a gross profit margin of 71.35% (+15.81%). 4. The performance of the securities market was weak, and investment income declined sharply. In the first half of 2016, the company achieved investment income of 141 million yuan (-43.10%). The company's investment income mainly includes investment income in joint ventures and joint ventures as well as other investment income. The company's main shareholders are Humen Bridge (11.11%) and Dongguan Securities (20%). Among them, Humen Bridge achieved operating income of 726 million yuan (+8.99%) and net profit of 473 million yuan (11.37%) in the first half of the year, contributing 52.5 million yuan in investment income (accounting for 37%). The participating company Dongguan Securities achieved operating income of 428 million yuan (-79.70%), net profit of 345 million yuan (-60.81%), and investment income of 69.07 million yuan (49%). The decline in the profit of Dongguan Securities is the main reason for the decline in the company's investment income and net profit. 5. Profit forecast and valuation We forecast the company's EPS for 16-18 to be 0.65, 0.74, and 0.81 yuan respectively, corresponding to the current PE 15.8X, 13.9X and 12.7X. The company's main business reversal, financial holding platform, and state-owned enterprise reform were trifectly catalyzed to maintain the “Highly Recommended - A” investment rating. 6. Risk Warning: Macroeconomic Decline Exceeds Expectations