Key investment points: The performance of the interim report is growing high, and the publishing and game industries are divided. In the first half of 2017, the company achieved operating income of 363 million yuan, an increase of 51.75% over the previous year; net profit attributable to shareholders of listed companies was 110 million yuan, an increase of 52.40% over the previous year. The company's performance achieved high growth in the first half of the year, mainly due to the company's acquisition of 100% of the shares of Youai Network and the merger in August 2016. Related revenue costs are included in the scope of statistics. Among the company's main business, the book publishing and distribution business achieved revenue of 129 million yuan, a year-on-year decrease of 11.32%; the mobile online game business achieved revenue of 234 million yuan, an increase of 149.03% over the previous year. The traditional publishing business is facing the challenges of digital media, and performance is declining, and there is an urgent need for transformation; on the other hand, the company continues to increase the emerging game industry through mergers and acquisitions, creating new profit growth points. The performance of mobile games is outstanding, and emerging growth points are beginning to gain strength. During the reporting period, the company added two new games. Among them, the recently launched “World Revitalization”, with an average monthly turnover of around 10 million yuan, was well received by the market. At the same time, mobile games such as “Forgotten Fairy” and “Crouching Tiger, Hidden Dragon” also continued to maintain a good level of profit. The company's distribution capacity continued to improve, and during the reporting period, it represented many famous games such as “Spiritual Domain: Breaking the Sky” and “The Secret of the Blue Cloud”. In the second half of the year, the company will continue to invest in IP and product reserves, and plans to launch nearly ten games developed independently, including “Crouching Tiger Hidden Dragon II” and “Extreme Master”. Among them, the action martial arts 3D mobile game “Crouching Tiger Hidden Dragon 2” distributed exclusively by Alibaba Games will begin unabridged testing on August 16. Performance growth can be expected. Acquisition of First Sight Technology to improve the layout of the mobile game distribution field. The company plans to acquire 73% of the shares in Hatsumi Technology. Combined with the fact that the company already holds 27% of the shares in Hatsumi Technology, the company will become a wholly-owned subsidiary of the company after the completion of this transaction. First Sight Technology focuses on the distribution and operation of mobile games, and operates a variety of high-quality mobile games such as “Attack on the Three Kingdoms” and “Sacred Sword Contract”. At the same time, Chuji Technology cooperates with upstream developers to introduce high-quality games, cooperates with downstream game operators to establish a joint operation platform, and is rich in mobile channel resources. Previously, the company acquired Magical Times and Youai Network in 2014 and 2016, respectively, and continued to deepen its layout in the field of mobile game development and enrich game products. After the acquisition is completed, First Sight Technology will form a healthy business circle with Magical Times and Youai Network, which will further improve the layout of the company's entire mobile game industry chain and help the mobile game business grow. Profit forecasts and investment advice. We expect the company's 2017-2019 EPS to be 0.47 yuan, 0.58 yuan, and 0.70 yuan, respectively. (If you consider the full year of the 2017 acquisition of First Vision Technology, the fully diluted EPS corresponding to the latest share capital in 2017-2019 is $0.54, $0.66, and $0.79). Referring to the game industry, Aofei Entertainment, Century Huatong, and Glacier Network unanimously expected PE to be 27 times, 31 times, 34 times, and 39 times respectively in 2017. We gave the company 32 times PE in 2017, with a target price of 15.04 yuan. Maintain the buy rating. Risk warning: The risk of a decline in the main business of traditional books, the risk of mobile game layout falling short of expectations, and the risk of lifting the ban.