Incident: The company's semi-annual report announcement showed that 2017 H1 achieved revenue of 406 million yuan, a year-on-year increase of 10.57%, net profit of 35.7 million yuan, a year-on-year decrease of 72.61%, and net profit of 24.94 million yuan after deducting non-return net profit of 24.94 million yuan, an increase of 37.44% over the previous year. The core view is that traditional business is growing, and mid-market adjustment and optimization of marketing business: The sharp year-on-year decline in the company's net profit during the reporting period was mainly due to the sale of 100% of Yuantong Incubation's shares in the same period last year, contributing 98.85 million in net profit. The non-operating profit and loss caused the base to be high, which caused a sharp decline in net profit in the same period this year. The company's main business operations were steady, and net profit withheld from non-primary sources increased by 37.44% during the reporting period. By business, the traditional LED business and MES business had a warming impact through integration and optimization and benefiting industries, and the strong competitiveness of high-quality customers and new products such as ultra-thin round panel lights, which prompted traditional business to achieve revenue of 174 million yuan during the reporting period, an increase of 72.42% over the previous year. At the same time, the gross margin level of the LED business and MES business increased significantly. The gross margin of the LED business increased from 15.94% in the same period last year to 22.31% this year, while the gross margin of the MES business increased from 10.12% to 17.97%; the revenue of the digital marketing sector The scale was 224 million yuan, a year-on-year decline of 13.57%, mainly due to proactive business adjustments, focusing on creative strategy business, and also being affected by reduced customer advertising, resulting in midmarket adjustments in the marketing sector's business scale. Overall, the effect of the adjustment gradually became apparent: the gross margin of the company's marketing sector increased from 24.43% in the same period in 2016 to 27.28% in 2017 H1. Profit levels increased markedly, and the synergy of its marketing targets was gradually reflected during the reporting period. Improve the SaaS layout framework and build business soft power ahead of time: The company is committed to achieving a breakthrough transformation into the enterprise SaaS service sector in the medium to long term. Since 2016, the company has successively invested in the consumer goods industry vertical SaaS company Win Market Connect (and Benefit World) with 14.45% shares, general SaaS service companies with six degrees and 15% shares, and six degrees people's product distributors have a 60% stake in Weibo. On the basis of exceeding gambling performance in 2016, Rokudoren achieved a year-on-year increase in revenue of 186.36% during the reporting period. Siudu Renren is a leading enterprise in the SCRM segment. It is also one of the first companies in China to propose and implement the SCRM concept. The core team mainly comes from well-known companies such as Tencent, Baidu, Microsoft, ZTE, and Kingdee. The main product, EC Business Connect, is the leading mobile sales SaaS platform for enterprises in China. As the SaaS industry continues to develop, the company continues to strengthen the construction of its own management team and improve its investment and research capabilities: Currently, Mr. Gao Liqiang has been introduced as the company's president, who has been deeply involved in computer software and services for 25 years and has rich industry experience. Previously, he served as Oracle's vice president, global vice president of Oracle (China), and general technical manager in China. It has had deep influence in the industry, while deeply connecting SaaS companies and talents. It has published the Maida SaaS Index and Maida Open Course to continuously strengthen the voice and market influence of the industry , committed to building an industrial ecosystem platform. The majority shareholders of the company set up an industrial merger and acquisition fund as a target for early quality participation, and the distribution company, Microlianda, for six times, showed that the company continues to revolve around the upstream and downstream of the industrial chain. In the future, an enterprise-level SaaS platform ecosystem is expected to gradually form through point-to-point integration of data, interfaces, users, etc. On August 1, the majority shareholders of the company announced that they intend to increase their holdings of the company by no less than 20 million yuan, demonstrating confidence. Profit forecast and valuation: We expect the company to achieve net profit of 1.02/1.28/145 million yuan in 2017-2019, respectively: 1.02/1.28/145 million yuan, corresponding to EPS: 0.18/0.22/0.25 yuan/share; corresponding current stock price valuations are: 48.6/38.7/34 x PE, respectively. There has been a clear correction in corporate valuations since this year. Equity incentives and majority shareholders' holdings increase are conducive to strengthening the target company's steady growth and operation, and ensuring the steady progress of the company's expansion into the SaaS service sector through digital marketing. In the future, it is optimistic that the company will continue to make efforts around enterprise-level SaaS services and maintain a strong recommendation rating. Risk warning: The company's enterprise-grade SaaS is not progressing smoothly, integration risks, and industry growth is slowing down.