Key investment points The company achieved revenue of 1,025 billion yuan in the first half of 2016, an increase of 25.45% over the previous year. By product, the company's decoration engineering and design business achieved revenue of 1,011 million yuan and 0.15 billion yuan, respectively; by region, the company increased 25.85%, 6.18%, 68.67%, 134.36%, -12.38%, 1.46%, and 4.13% year-on-year in South China, East China, Northeast China, Northwest China, Southwest China, North China, and Central China, respectively. The company achieved a comprehensive gross profit margin of 14.26% in the first half of 2016, a year-on-year decrease of 0.02%. By product, the gross margins of the company's decoration engineering business and design business were 14.28% and 12.76%, respectively, up -0.02% and 0.18% year-on-year; by region, the company's gross margins in South China, East China, Northeast China, Northwest China, Southwest China, North China, and Central China increased by -0.98%, 1.50%, -1.70%, 0.15%, -1.00%, 2.46%, and 0.15%, respectively. The gross margins in South China, Northeast China and Southwest China declined. The company achieved a net profit margin of 5.25% in the first half of 2016, up 0.59% from the same period last year. While gross margin remained flat, the year-on-year increase in net interest was mainly due to a decrease in the cost ratio during the period. The expense ratio for the first half of the year was 4.58%, down 0.51% from the previous period, mainly due to a decrease in management expenses. In terms of items, the company's sales expenses ratio was 1.09%, the same as last year; the management expenses ratio was 2.96%, down 0.52% from last year; and the financial expenses ratio was 0.53%, up 0.01% from last year. The company's asset impairment losses accounted for 3.08% in the first half of 2016, an increase of 2.29% over the same period last year, mainly due to a higher increase in bad debt losses compared to the same period last year. On a quarterly basis, the company's asset impairment losses in Q1 and Q2 accounted for 1.08% and 5.13% respectively, up 0.50% and 4.13% respectively over the same period last year. The company's net operating cash flow per share in the first half of 2016 was 0.27 yuan, an increase of 0.40 yuan over last year. Profit forecast and rating: We expect the company's EPS to be 0.62 yuan, 0.84 yuan, and 1.02 yuan respectively in 2016-2018. The corresponding PE is 68.0 times, 50.1 times, and 41.1 times, respectively, and raised to a “gain” rating. Risk warning: macroeconomic downside risks, new business development falling short of expectations