Key investment matters: The company released the 2016 interim report on July 30. Ping An's view: Revenue grew steadily, and the net profit corresponding to the main business turned a loss into a profit: in the first half of 2016, the company achieved operating income of 256 million yuan, an increase of 11.16% over the previous year; realized net profit of 202 million yuan, an increase of 3,818% over the previous year. The main reasons for the increase in the company's performance are the non-operating income confirmed by Lehui's equity transfer over time and the transformation of performance from traditional peripheral businesses into profits. The company's net profit after deduction was 13.27 million yuan, an increase of 254% over the previous year. The robot and drone business is in a period of accumulation of business development, and a lot has been invested in R&D and marketing expenses, so the company's comprehensive cost rate has risen. The company decided not to increase or pay dividends in mid-'16. Focus on intervening in the field of e-sports peripherals to create a V series product line: By leveraging the advantages of offline channels and formulating diversified marketing policies, we enhance the brand recognition of products among e-sports enthusiasts and high-end players, thus laying a solid foundation for continuously increasing the share of the Internet cafe market. During the reporting period, thanks to the smooth development of new customer groups, the competitive business growth trend was obvious, and the peripheral business achieved a complete reversal of losses. The new products Kongying and XPLOER MINI jointly created and operated by the company and Tencent are in the final product testing stage, and related products are expected to be launched one after another in the second half of the year: since the company's drone business began last year, XIRO generation drones have achieved large-scale sales, and the products have entered more than 10 countries and regions at home and abroad. During the reporting period, the company expanded the consumer base and enhanced brand market influence through continuous innovation, segmentation of the company's drone product positioning, optimization and improvement of the product line, and strived to provide users with products that are more affordable, more convenient to carry, simpler to operate, and more diverse in social networking in the future. By the end of the reporting period, the new products Kongying and XPLOER MINI jointly created and operated by the company and Tencent were in the final product testing stage, and related products are expected to be launched one after another in the second half of the year.? Cooperate with Zero and Tencent to seize the consumer drone market: According to American aviation consulting firm Teal Group, the consumer drone market will grow faster in the next few years. The market size was $2.8 billion in 2014, and this figure will double to $5.6 billion by 2020. As a huge demand market for civilian drones, China's market size is expected to reach 11 billion yuan in 2018 and soar to 75 billion yuan in 2025. Vigorously deploying the robotics business, and has already won orders: The company has established a robotics company based on the integrated development of automation in the internal 3C field, and has begun to design, plan, and implement robot production lines, or integration projects for other 3C companies. Currently, there are orders of 90 million yuan, and new orders are expected to increase by another 200 million yuan during the year. At the same time, the company continues to accelerate the commercialization process of the robot solution business, with a view to seizing the development opportunities of the industrial robot industry. In November 2015, the company prepared to raise capital through a non-public stock offering for the development and promotion of the company's robot and drone projects. Of this, 340 million yuan is used for the robot integrated system equipment industrialization project. It is dedicated to commercializing the procedures and actions of robots. It can adapt to the detailed actions of 3C industry enterprises in various processes, making them sell products to industry customers. Profit forecast: Due to the New Year's Eve special treatment of Lehui's equity matters, we raised the company's profit forecast for 16 years, from $157 million to $329 million, up 109%; keeping the net profit forecast for 17-18 unchanged. According to this forecast, the company's EPS from 2016 to 2018 was 1.16, 0.78, and 1.07 yuan, respectively. The PE multiples corresponding to the current company's stock price are 42.4 times in '16, 63.2 times in '17, and 45.8 times in '18, respectively. We maintain our “Recommended” rating. Risk warning: The risk that the company's e-sports PC peripherals market will not expand as expected; the risk that competition in the consumer drone market will increase.