Key investment points: Revenue remained stable, and net profit after deducting non-return to mother declined slightly. Revenue from the network optimization business declined, revenue from IT vocational education business increased, and overall gross margin declined. The company released its 2017 semi-annual report, achieving operating income of 334 million yuan, which is basically the same; achieved operating profit of 58.7828 million yuan, an increase of 26.10%; realized net profit attributable to owners of the parent company of 72.7517 million yuan, an increase of 35.89% over the previous year; and realized net profit without deduction of 34.023 million yuan, a year-on-year decrease of 28.48%. Due to the transfer of shares in participating companies in the current period, the company achieved investment income of 36.0337 million yuan. There was a big difference between the company's net profit and net profit after deducting non-net profit. During the reporting period, the company's instrument business was affected by the two major operators, Mobile and Unicom, and product demand was still strong; the big data business, which revolved around the operator's signaling platform project and the public security system's big data analysis platform project progressed smoothly, and it is expected that the public security system's big data business volume will exceed the operator's big data business volume throughout the year; and the Internet Premium Service business, product revenue declined slightly year-on-year due to budget cuts by operators in various provinces. Overall, the gross margins of the company's wireless network premium products, network optimization and technical service revenue, IT vocational education and training system platforms, and IT vocational education and training were 64.59%, 22.90%, 52.36%, and 38.52% respectively, a year-on-year decrease. The construction and layout of Dingli University continues to advance, and the implementation process lags behind the plan, but the direction is clear and expectations continue. During the reporting period, on the one hand, the company strengthened the existing college team and content, of which the college had independently enrolled more than 2,000 students in 2017; on the other hand, due to objective factors including school procedures, the overall implementation situation lags behind the original plan, but the company's semi-annual report shows that cooperation with potential institutions has progressed to the final signing stage, and future performance growth can be expected. Beijing Jianuo Mingde Education Consulting Co., Ltd., which is controlled by the company's capital increase, is also actively planning IT skills training. Currently, it has set up 3 teaching bases in Beijing, Zhengzhou, and Shenzhen, and carried out a total of 12 IT classes in the first half of the year. Overall, the company's vocational education business is in the layout period. On the one hand, the extension expansion process is somewhat uncontrollable. On the other hand, the early layout inevitably led to a cost-first situation, which had a certain impact on profit margins. For example, the company participated in the establishment or investment of new companies, Beijing Zhixinshu Co., Ltd., Background Information Health Technology Co., Ltd., and Beijing Jianuo Mingde Education Consulting Co., Ltd. all lost money in the first half of the year, but in the long run, they will promote the construction of the company's vocational education group from different dimensions. The acquisition of “One Core Intelligence” has completed the transfer. Following the targeted senior management shareholding plan, the company will launch an equity incentive plan. On July 24, 2017, Yixin Smart completed the account transfer. Yixin Intelligence promises that net profit after deducting non-recurring profit and loss in 2017, 2018, and 2019 will not be less than 50 million yuan, 60 million yuan, and 80 million yuan, respectively. The merger and acquisition of One Core Intelligence is conducive to adapting to the trend of telecom operators deploying the Internet of Things, achieving expansion and expansion, and implementing plans decided by listed companies to expand into new fields of information technology, including the Internet of Things. In June of the same year, the company announced a restricted equity incentive plan. The initial grant price was 5.03 yuan. The grant conditions required profit growth of not less than 35%, 60%, and 100% in 2017, 2018, and 2019, respectively, based on 2016 net profit. The shares were granted to more than 100 employees, including directors and supervisors. The plan is to acquire financial and financial education companies in cash and continue to expand the vocational education sector. On July 30, 2017, the company announced the signing of the “Letter of Intent to Transfer Equity” to obtain 100% of the shares of the target company (financial education enterprise) in the form of cash payments. The target company estimated the estimated price of 360 million yuan, and promised to achieve corresponding annual net profits of not less than 25 million yuan, 30 million yuan, 36 million yuan, and 42 million yuan respectively during the four years of 2017-2020. Currently, the acquisition is in the final due diligence stage, and there is still some uncertainty, but the company's determination to actively lay out vocational education is evident. Investment recommendations and business forecasts. 2016 was the year of Century Dingli's layout. Revenue and profit achieved moderate growth, and various layout results and operating indicators were positive. In the first half of 2017, the net profit of listed companies withheld from their mother decreased to a certain extent, mainly because the construction and layout of Dingli University continued to advance, the implementation process lagged behind the plan, and invested a large amount of capital and upfront costs in various strategic layouts. Currently, the company is actively exploring the expansion of the communications industry business. The merger and acquisition of One Core Intelligence has become a new starting point for strategic upgrading; responds positively to the country's policy support for the integration of maternity and education projects, attaches great importance to vocational education, continues to build Dingli University using Zhixiang Education's many years of experience; and continues to explore investment and mergers in vocational education to improve the vocational education landscape with external extension. Since Yixin Smart's new M&A shares have not yet been listed, we are not adjusting our performance forecasts for the time being. Without considering the impact of the merger and acquisition of Yixin Intelligence, we forecast the company's net profit for 2017-2018 to be RMB 183 million and RMB 274 million, respectively, and the corresponding EPS of RMB 0.37 and RMB 0.55, respectively. Based on the valuation level of the same industry, 41 times PE in 2017 was given, corresponding to a target price of 15.17 yuan/share, maintaining the purchase rating. Risk warning. Epitaxial layout, Dingli University's progress falling short of expectations, market risks and operating risks, etc.