Profit: the loss expanded in the first half of the year, mainly due to the decline in the performance of Yishan Hotel. The operating income of the company in the first half of the year was 43.2022 million yuan, down 4.51% from the same period last year. In the first half of the year, the net profit attributed to the parent company was 32.8752 million yuan, and the net profit returned to the parent company in the same period last year was 39.9276 million yuan, turning from profit to loss compared with the same period last year. In the first half of the year, the non-net profit was-32.4869 million yuan, which was higher than the loss of-2567.97 yuan in the same period last year. In terms of profitability, the company achieved a gross profit margin of 85.32% in the first half of the year, down 3.1 percentage points from the same period last year. During the period, the expense rate was 150.4%, an increase of 11.2% over the same period last year, of which the management expense rate, sales expense rate and financial expense rate increased by 10.5%, 3.6% and 2.8% respectively compared with the same period last year. The main factors affecting income and profit in the first half of the year are: (1) Tangshan Hot Spring Company, a subsidiary of the company, transferred its 19% stake in Nanjing Yishang Tianyuan Business Management Company in 2015. the investment income was 59.47 million yuan; (2) the Golden Eagle property disposal was completed in 2015, and the recognized income was 6.06 million yuan; (3) the operating income decreased slightly.

Sub-business: hot spring passenger traffic dropped 17.3% compared with the same period last year, and the emerging service industry began to generate income. In the first half of the year, the company's operating income from tourism and service industry was 38.7071 million yuan and 1.6771 million yuan respectively, accounting for 89.60% and 3.88% respectively. Among them, tourism revenue fell 12.88% compared with the same period last year, mainly due to the poor operation of Nanjing Tangshan Yishang Hot Spring. In the first half of the year, Nanjing CITS United Tangshan Hot Spring Co., Ltd. earned 35.6605 million yuan. Among them, room income, catering income and hot spring income were 10.5278 million yuan, 6.0776 million yuan and 18.5379 million yuan respectively, down 3.2%, 12.6% and 12.1% respectively, with a loss of 15.2804 million yuan. Tangshan Hot Spring Company lost 1549 yuan (excluding investment income 5947 yuan) in the same period of 15 years, and the scale of the loss in the first half of the year was basically the same as that in the same period last year. In terms of passenger flow, the number of hot spring passengers in the first half of the year was 140000, down 17.3% from the same period last year, and the room rental rate decreased by 7 percentage points compared with the same period last year. In addition, the company's emerging business generated a small amount of income, with fund management fees and basketball training income reaching 760800 yuan and 193600 yuan respectively in the first half of the year.

Highlights: enter the Internet marketing, e-sports industry, invest in frequent transformation and accelerate the new line of China Television: on July 12, the company announced that it plans to buy 100% equity of the new line with 400 million yuan, including 180 million yuan in cash and 220 million yuan in shares. at the same time, supporting the raising of no more than 193 million yuan to pay this cash consideration, the price of issuing shares to purchase assets and supporting financing is 10.97 yuan per share. The net profit promised in 16-18 is not less than 36 million yuan, 47 million yuan and 61 million yuan respectively. After the completion of the merger and acquisition, the company is expected to greatly improve the company's profitability and realize another key measure to cut from traditional tourism into the entertainment market. Help the company into a sound industrial extension layout.

E-sports Carnival: the company signed a letter of intent with the Sports Information Center of the State General Administration of Sports and Shanghai Xiaoshang Culture Communication Co., Ltd. the three parties will cooperate to build a China e-sports carnival brand, and the company has won the right to co-host for 16 to 18 years. Under the background of the rapid development of e-sports industry, the bonus amount and scale of third-party events are increasing, the future copyright value is broad, and the value of high-quality events is increasing. The company's profits in e-sports Carnival project are divided into 60%, and so far it has invested 6 million yuan.

VR camera and show layout: after investing 9 million yuan in February to finance Zhixun's 5% stake, the company increased its capital by 5% with 9 million in May, and its developed VR camera is currently in a releasable state.

Online education industry fund: on April 18, the company contributed 20 million yuan with Muhua Jinxin and others to participate in the online education industry fund Nantong Muhua Equity Investment Center to invest in equity around online education and its derivative industries. Make use of the resource advantages of professional institutions to enhance their investment profitability.

Acquisition of Wind and Water Navigation: on May 17, the company plans to invest 12 million yuan to acquire 60% stake in Xiamen Wind and Water Navigation. Wind and Water Navigation is committed to promoting the layout of its own sports and cultural industry in folk navigation.

The transformation of sports and entertainment is accelerated, medium-and long-term profits are expected to improve, and the company's performance loss in the first half of the year is basically the same as last year, and there is a strong expectation of performance improvement brought about by the new line of mergers and acquisitions. And cooperate to hold e-competition to cut into the fast-growing e-sports industry, expand the company's industrial chain layout and bring new growth expectations at the same time. The company accelerates the strategy of accelerating the layout of the sports and entertainment industry through mergers and acquisitions of fund companies, and has a solid foundation for medium-and long-term growth. With the gradual divestiture of redundant projects and the increasing investment in sports and entertainment industry, the company's EPS in 16-18 is expected to be-0.09yuan,-0.01yuan and 0.04yuan respectively, maintaining a "prudent overweight" rating.

Risk hint: the progress of the merger and acquisition of the new line is lower than expected, the profit of the original Yishan Hot Spring Hotel and the transformed sports and entertainment business is lower than expected, and the company's transformation progress is not as expected, which may lead to continued losses.