Event: The company announced its semi-annual report: the first half of the year achieved revenue of 860 million yuan, a year-on-year decrease of 1.1%; realized net profit of 76.8 million yuan, an increase of 8.7% over the previous year, and EPS of 0.25 yuan. Among them, Q2 achieved revenue of 430 million yuan, a year-on-year decrease of 1%, and net profit of 41.27 million yuan, an increase of 11.2% over the previous year. The company expects net profit from January to September 2017 to change by -15% to 15%. Key investment points: The company's main business is operating steadily, and the gross margin of the two major sectors has steadily increased. The catering sector achieved revenue of 640 million yuan in the first half of the year, down 0.6% year on year; gross margin increased by 2.81PCT to 66.5% year on year; contributing 75% of the company's revenue share and 79% of gross profit, respectively, was the company's main source of revenue and profit. The product sales business achieved revenue of 196 million yuan, down 3.3% year on year, and gross margin increased 2.83PCT to 46.8% year on year. The ability to control costs and expenses is strong. The company's overall gross margin and net profit margin increased by 2.88PCT and 1.25PCT to 62.5% and 9.8% year-on-year respectively in the first half of the year, thanks to strong cost and cost control capabilities. The company's operating costs fell 8.2% year on year, exceeding the 1.1% drop in revenue, reflecting strong cost control capabilities. In terms of expenses, the company's sales, management and financial expenses accounted for 36.6%, 14%, and 0.12% of revenue, respectively, up 3.2 PCT, 0.9 PCT, and 0.27 PCT from the same period last year. The fee rate for the period increased by 3.8PCT to 50.7% year on year, a slight increase. Among them, the year-on-year increase in sales expenses was mainly due to the company's increased promotion efforts such as holiday theme marketing, new media marketing, and news marketing; the decline in financial expenses was mainly due to the reduction in processing fees brought about by online payments. Chain management is progressing steadily, and emphasis is placed on brand serialization. The company opened 2 new direct-run stores and 1 franchise store in the first half of the year. As of June 30, the company had 114 stores, of which 109 were in China, including 38 direct-run stores and 71 franchised stores, respectively. In addition, the company also has 5 overseas franchise stores. In the future, the company will focus on the Beijing-Tianjin-Hebei region and the “Yangtze River Delta” region for development and expansion. The company also listed brand serialization as a priority for 2017 and even the next few years, is committed to a multi-brand strategy, and divides existing direct-run stores into three categories: travel stores, community stores, and shopping mall stores, and has launched different versions of menus for different types of stores to prepare for future brand serialization. Profit forecasts and investment ratings: Maintain profit forecasts and investment ratings. The company operates steadily, continuously adjusts the product structure to meet market needs, and actively increases marketing measures and enhances brand influence. The e-commerce business has performed excellently. The company's acquisition of “Tomson Chef” is still in progress and is currently in the due diligence stage. If the acquisition is successful, its business can complement the company's existing business and complement the company's new casual catering business format, which is conducive to enhancing the company's overall competitiveness. Without considering the impact of the acquisition yet, the profit forecast is maintained. The company's EPS from 2017 to 2018 is expected to be 0.5 yuan and 0.55 yuan respectively, and the corresponding PE is 39 and 35 times, respectively, maintaining the “increase in holdings” rating. Risk warning: 1) food safety incident; 2) new store performance falls short of expectations; 3) acquisition falls short of expectations; 4) increased market competition