The performance was generally in line with expectations. Contact Interactive announced the 2016 semi-annual results: operating income of 590 million yuan, up 115.7% year on year; net profit attributable to parent company was 190 million yuan, up 38.4% year on year, corresponding to earnings of 0.09 yuan per share. Trends 1. The main growth comes from overseas markets and smart hardware business. App distribution: Revenue was 434 million, up 122.78% year over year. Merchant Cloud Search: Revenue was 49.35 million, down 29.52% year on year. The confirmation of operating income of the cloud search business has been delayed due to changes in settlement methods through cooperative channels, etc. Intelligent hardware: revenue of 101 million. The composite gross profit margin for the first half of 2016 was 56.9%, down 15.2ppt from last year. The main reason is the increase in the share of hardware sales revenue with low gross profit, and the confirmed revenue of business cloud search was lower than expected. Net interest rate fell 17.7ppt to 34.2% year on year. 2. With the launch of premium mobile games and the targeting of high-quality CPs and continuous consolidation of content layout, the game business is expected to contribute significant performance elasticity. In the first half of the year, the launch of premium games was delayed due to new policy restrictions. The release rate of games accelerated in the second half of the year. The mobile game “Armor Warrior” is expected to officially launch on the WeChat platform in September, and games such as “Let's Fly, Wukong” and “Bathing in the Sky” are also expected to land on the WeChat platform within this year. Furthermore, the company plans to invest 100% in Shanghai Zhuoxiang and Chengdu Dongyu Digital to incorporate the boutique mobile game CP into the company system. 3. The epitaxial expansion continues to consolidate the ecological landscape of “connecting OS+hardware+content+services”. The company has successively invested in Avegant, eSmart Tech, Cool Energy Technology, Fun Phase, etc., to acquire 64% of Dehair Healthcare's shares, and has invested in leading VR company Razer to continue to promote business layout in smart wearables, smart homes, car networking, smart healthcare, VR, and Internet finance. Meanwhile, a fixed increase of 4.8 billion dollars has already arrived, and the company plans to invest in the US e-commerce company New Egg. Profit Forecast We lowered our earnings per share forecasts for 2016 and 2017 by 17.39% and 9.38% from RMB 0.27 and $0.35 to RMB 0.23 and $0.32, respectively. Valuation and recommendations Currently, the company's stock price corresponds to a price-earnings ratio of 86 times in 2016. We maintained our recommended rating, but lowered our target price by 13.33% to RMB 30, which is 52.21% higher than the current stock price. The risk game project is progressing less than expected.