Performance summary: In the first half of 2016, the company achieved operating income of 741 million yuan, a year-on-year decrease of 2.46%; net profit attributable to shareholders of 44.45 million yuan, a year-on-year decrease of 13.95%. Downstream cigarette label printing demand was sluggish, and revenue declined slightly year over year. During the reporting period, the company's revenue declined slightly year-on-year, mainly because the main application market for vacuum aluminized paper was cigarette label printing. Affected by the macroeconomic downturn and the implementation of tobacco control policies, the domestic tobacco industry was under high pressure to remove inventory, and sales of the company's products declined. In response to the sluggish demand in the downstream market, on the one hand, the company consolidates the competitive advantages of traditional businesses, and on the other hand, actively explores new businesses such as cigarette label printing, cloud printing and e-cigarettes, and enhances marketing capabilities through e-commerce platforms. Looking at the whole year, as new businesses such as cloud printing and e-cigarettes gradually contribute revenue, the company's revenue is expected to stop falling and rebounding throughout the year. The management expense ratio increased by 4.19 percentage points, which dragged down the increase in net profit margin. During the reporting period, the company's overall gross margin was 31.02%, an increase of 3.23 percentage points over the previous year, mainly due to the decline in raw material prices and the increase in the share of new business revenue with higher gross profit; the management expense ratio was 16.61%, an increase of 4.19 percentage points over the previous year, mainly due to the company's increased investment in R&D and employee wages and benefits. Affected by the increase in the expense ratio, the net profit margin fell 0.55 percentage points year over year to 6.52%. Consolidate the leading position in the traditional main business and actively build new profit points. The company's traditional main business is vacuum aluminized paper, which is mainly used in the field of cigarette label printing. Faced with the pressure of sluggish market demand, the company is actively seeking change in two directions. The first is to consolidate the leading position in the traditional main business, improve the management capacity of upstream suppliers, and enhance the coverage of customers, especially high-end cigarette companies, by integrating existing resources, and improving management capabilities for upstream suppliers, including holding high-quality cigarette label printing companies Yuxi Printing and Qujing Fupai to directly connect with end customers; the second is to lay out new businesses horizontally to create new profit points, including e-cigarettes and cloud printing. Currently, market development is progressing well and has high growth potential. Profit forecasts and ratings. Net profit growth in 2016-2018 is expected to be 8.62%, 27.30%, and 41.50%, respectively, and EPS is 0.22, 0.28, and 0.40 yuan respectively, giving it an “increase in holdings” rating. Risk warning: tobacco control policies are becoming stricter; tobacco label printing market expansion falls short of expectations