In the first half of 2016, the company achieved operating income of 361.1096 million yuan, an increase of 17.45% over the same period last year, mainly due to the increase in the income of Xi'an China Travel Service and Xi'an overseas travel agencies in the current period. the net profit belonging to the owner of the parent company was 3.7015 million yuan, an increase of 142.73% over the same period last year, mainly due to the increase in financial income in the current period. From the perspective of business, the revenue of travel agencies reached 320 million yuan, an increase of 22.93% over the same period last year, and the gross profit margin decreased by 3.52%, mainly due to the overall increase in the number of people received by travel agencies; the income of hotels reached 37.24 million yuan, down 15.38% from the same period last year, and the gross profit margin increased by 21.79%.

Tourism business began to strategic adjustment, to explore new ways of operation (1) Hotel business: the company's hotel location conditions are better, but due to the use of a long time, lack of updated facilities, so the operating condition has not been very ideal. In order to reverse the loss situation, the company decided to change the business model of Xilu New Guanghua Hotel and its branch Northwest Hotel by exploring the development models such as overall leasing of operating assets and mixed ownership reform. New Guanghua Hotel and Northwest Hotel will be rented out. The plan is expected to reverse the situation that the main business of the hotel has lost money for many years, and the annual profit is expected to change from loss to flat. (2) introducing external resources to participate in the company's project development: the company signed a "Cooperative Development Framework Agreement" with Hangzhou Saishi Garden on the Xi'an Weishui Garden Flower Town Project, with the invested Weishui Garden Company as the main body to create high-end flower tourism products, at the same time, combined with the supporting elements of global tourism services, to build an one-stop tourism and leisure destination. Through the introduction of social capital and professional management team, it is expected to bring new ideas and experience to the company, and it is also a useful attempt for the development of the company's follow-up tourism projects. (3) actively explore Internet + tourism: Xi'an overseas Tourism Co., Ltd., a wholly-owned subsidiary of the company, and four natural person shareholders have invested in the establishment of Xi'an Donkey Mother International Travel Service Co., Ltd., of which Xi'an overseas Tourism Co., Ltd. holds 25% of the shares. In the first half of 2016, the donkey mother carried out publicity and promotion with the help of a series of large-scale marketing activities, which helped the donkey mother quickly open Xi'an and its surrounding markets, achieving an income of 3.99 million yuan.

Status of key construction projects OUTLETS project: 68000 square meters of commercial complex to achieve the top. The reconstruction project of Shengli Hotel: complete the project application and bidding announcement, and obtain the Construction Project Planning license. However, due to the influence of the construction period of the subway plan, the progress of the project is not as expected. Trusteeship project: renew the one-year trusteeship contract with the ancient aquatic city scenic spot in Liaocheng, Shandong, from July 1, 2016 to June 30, 2017, with an annual escrow fee of RMB 1.8 million.

Profit forecast and rating. As there is still uncertainty in the acquisition of the trio, the impact of the fixed increase on performance will not be considered for the time being. In addition, taking into account the impact of the opening of Xi'an high-speed rail and financial returns (460 million of the financial funds are still due after 2017 and are expected to contribute 30 million of profits) on the company's performance, the forecast of EPS of 0.03,0.04,0.06 yuan from 2016 to 2018 will remain unchanged. With reference to the 2016 PB of companies in the same industry and the company's current strategy to actively become bigger and stronger through capital operation and project mergers and acquisitions, and considering the expected existence of the company's state-owned enterprise reform, it will be given a buy rating of 5 times PB in 2016, corresponding to the target price of 16.75 yuan.

Risk hints: there is still great uncertainty in the acquisition; the risk of high asset appreciation rate and impairment of goodwill; the risk of loss of core personnel; and the progress of state-owned enterprise reform is not as expected.