Performance Overview In the first half of 2017, the company achieved operating income, operating profit, and net profit attributable to shareholders of listed companies of 846 million yuan, 100 million yuan and 895.585 million yuan respectively, up 15.28%, 13.44% and 10.57%, respectively. Achieved a fully diluted EPS of 0.10 yuan/share, in line with expectations. Net cash flow from operating activities was -72,817,600 yuan, lower than net profit for the same period. On a quarterly basis, the company's Q1/Q2 revenue growth rates were 14.27%/16.33%, respectively, and net profit to mother grew 9.63%/6.46% year on year, respectively. The company also expects net profit from January to September 2017 to be 115 million yuan to 150 million yuan, an increase of 0% to 30% over the previous year. Operating analysis The revenue growth rate reached a record high, and profitability remained steady. In the first half of the year, the company's revenue continued to grow (+15.28%), the highest revenue growth rate in the first half of the year since listing. The gross margin of the main business increased slightly to 32.98% (2.98pct.). The cost rate increased by 3.01 pct during the period. Among them, the sales expense ratio and management expense ratio have both increased (1.92pct./0.45pct.) , the financial expense ratio increased by 0.65pct. Among them, the increase in sales expenses was mainly due to the full inclusion of Schimmel (Schimmel) data and the promotion of sales. Net profit margin to mother was 10.59% (-0.70pct.). The traditional piano business continues to grow by 2, and continues to promote service and brand building. In the first half of the year, the company's piano business revenue increased 10.79%, mainly due to the inclusion of data from the German company Schimmel. In the first half of the year, the company stepped up its independent innovation efforts, carried out 110 improvement tests on various new materials and processes, and cooperated with FIND to develop 5 new smart pianos. In terms of marketing, the company continues to expand its sales network in depth, encourage the development of specialty sellers and specialty store distribution units, build unified brand image stores, adopt new marketing policies for high-end products, and guide the upgrading of dealer sales structures. At the same time, the company continues to achieve online and offline integration and enhance stickiness with users through holiday-themed promotions. The company deeply integrates Internet+ to build a cloud service platform. Build a leading “piano service on the cloud” ecosystem and build a closed loop in the company's “manufacturing-leasing-service-education” industrial chain. The company continues to promote global brand activities and is committed to building an international musical instrument culture brand. By supporting major international cultural events, hosting music events, and promoting brand charity activities, we have established the company's international musical instrument culture brand image and enhanced the brand's popularity and reputation. Art education is diversified, media business is developing steadily, and the company's layout and cultural business are showing results. In the first half of the year, the company became one of the first members of the Guangzhou Cultural Listed Companies Industry Alliance. It continued to combine the development of smart musical instruments and smart teaching app modules, and continued to promote art education brand activities such as art classrooms and super partners. As of June 30, the company's cultural and art education centers in Jinan and Foshan have been opened and operated, and the Beijing Art House has also reached the end of construction. Currently, the company has 368 art education franchisees across the country, covering 29 provinces, and has developed 38 new full-image art classrooms. On August 16, the company announced that it signed a “strategic cooperation agreement” with China Education Television. The two sides will cooperate in kindergartens, training, education industrial parks, and “double innovation”. We believe that the company currently has a solid foundation both in terms of art education promotion experience and physical store layout, and China Education Television has the advantage of being a media platform directly under the Ministry of Education. Therefore, this cooperation is a strong alliance, which is conducive to improving the company's education system and accelerating the expansion and long-term development of the education business. In the first half of the year, Zhuguang Media, a holding subsidiary of the Group, successively completed investments in 12 TV series and online dramas, with a total additional investment of 10.5 million yuan. Among them, the TV series “Our Family” invested by the company has completed its first round of broadcasting on the contracted provincial TV stations. On the revenue side, in the first half of the year, the company's cultural business revenue grew by 320.80%, with total revenue exceeding 36 million yuan. We believe that the company's art education business is in the stage of deepening development, media investment is also being steadily rolled out, and the results of the overall large-scale cultural industry layout have gradually begun to show. The reform of state-owned enterprises has progressed, and the digital piano business will be further developed in the future. On June 13, the company announced that the holding subsidiary Amoson was included in the first batch of mixed ownership employee shareholding pilot enterprises. Currently, the employee shareholding plan has been announced. On July 6, the company announced that it plans to issue 8.41 million additional shares through capital increases and stock expansion to bring in targets such as strategic investors, management and core employees. It is expected that after the implementation of this capital increase and share expansion is completed, the original shareholders, strategic investors, market makers or institutional investors will directly hold Amoson shares, and management and core employees will indirectly hold Amoson's shares by setting up a shareholding platform (limited partnership). We believe that this capital increase and stock expansion will help optimize the Amoson shareholder structure. At the same time, as a holding subsidiary of the company, Amoson's main business is digital pianos. Currently, China's digital musical instrument industry is in a period of rapid development opportunity. Through this employee shareholding, it will facilitate the development of Amoson's core business, enhance its governance level and profitability, and lay a solid foundation for building a closed loop of “terminal+platform+content” O2O smart instrument ecosystem, thus driving the company's revenue growth in the digital piano business. Risk factors The progress of the fund-raising project falls short of expectations; competition in the piano manufacturing industry increases the risk; the management risk of cultural industry expansion; and the risk of approval for this non-public offering. Profit forecasting and investment suggestions On the basis of strengthening the main piano business, the company actively extends the culture and education industry, and at the same time grasps the piano post-service market and establishes a closed loop of “manufacturing - rental and sale - service - education” industry chain to achieve the company's strategic goals of strengthening the main piano business and expanding the cultural industry. We predict that the company's EPS will be 0.19/0.24/0.31 yuan/share (three-year CAGR 24.8%) after full dilution in 2017-2019. The corresponding PE score is 65/51/40 times, maintaining the company's “buy” rating.