Key investment points: Revenue increased slightly in the first half of the year, and net profit declined sharply: in the first half of 2013, the company recorded operating income of 680 million yuan, an increase of 4.6% year on year; gross margin reached 68.9%, up 1.2 percentage points year on year. As of the end of June, the number of stores was 75. Due to the combined effects of opening new stores, the macroeconomic downturn, national policies, and bird flu, the same store fell 8.7% in the first half of the year, and the share of expenses rose sharply. Net profit for the period fell 43.3% year on year to 31.83 million yuan; EPS was RMB 2.1 points, with a dividend of 0.8 HK cents per share in the medium term. The increase in passenger traffic in Shanghai's Xiaonanguo, and the decline in customer unit prices was the main reason for the negative increase in the same store. As of the medium term, there were 67 stores in Shanghai Xiaonanguo, of which 3 new stores were opened in the first half of the year. The high-end restaurant business was sluggish in the first half of the year due to factors such as consumption and bird flu. In response to this situation, Xiaonanguo Restaurant adopted promotional measures. Although same-store sales continued to decline in the first half of the year, the decline was mainly due to private room consumption, which actually rose by 4-5%; passenger traffic increased 1.7% during the period, and the decline in per capita consumption was the main reason for the decline in same-store consumption. The opening of a new store in Nan Xiaoguan has become the driving force for performance growth: the company has moved the successful model of Nan Xiaoguan to the mainland. The first Nan Xiaoguan store in Shanghai opened in June. Currently, it is operating well. The turnover rate is over 4.5 times, and the store profit margin is over 18%. It is expected to pay for itself within a year and a half. In the future, the company will quickly replicate this model. 4-5 new stores will be opened in the second half of the year, and 10 and 15 stores will be opened in 2014 and 2015, respectively. It is estimated that by 2015, the average monthly revenue of this portion will exceed 35 million yuan, and its share in the overall business will gradually increase. Respond to market changes and actively adjust development strategies: Currently, the negative impact of macroeconomics and public consumption on the industry shows no clear signs of improvement; the company's growth can only rely on adjusting sales and operating strategies on its own. In the future, the company will continue to launch new dishes, continue to promote the management of branded food, strengthen banquet sales and various promotions for individual household consumption and develop a “Little South Country” to cover more household consumption, and give due consideration to mergers and acquisitions strategies. At the same time, they are also trying to cooperate with high-end hotels to expand other asset-light development models. The above measures are all aimed at increasing passenger traffic, attracting household consumption, and increasing scale effects. The company opened 5 new stores in the first half of the year, and the target of 17 stores compared to the 22 planned for the year will be concentrated on opening in the second half of the year. We believe that apart from industry factors, there is a lot of pressure to open new stores in the second half of the year. The same store is expected to improve only slightly, and it is expected to drop 7-8% for the whole year. Target price: HK$1.30, maintaining a neutral rating: As the current state of the industry has not improved significantly, adverse factors still affect the company's operations. We maintain the target price of HK$1.30 given to the company in the previous report, which is basically the same as the current price. However, from a long-term perspective, we believe that the company has good operating ability, strong brand advantage, and has taken a series of improvement measures, and is expected to achieve obvious results after next year.