Investment highlights: Event: On August 28, the company released its 17-year semi-annual report. During the reporting period, the company achieved revenue of 100 million yuan, a year-on-year increase of 45.13%, net profit of 81.3787 million yuan, a year-on-year increase of 99.84%, net profit of 757.362 million yuan after deducting non-return net profit of 757.362 million yuan, a year-on-year increase of 113.68%, and a comprehensive gross profit ratio of 65.36%, a year-on-year increase. Among them, communication technology services achieved revenue of 56.1903 million yuan, with a gross margin of 20.25%; gaming realized revenue of 209 million yuan, with a gross margin of 77.55%. Opportunities and challenges coexist in the communication network service market, and the communication service business continues to be consolidated to strengthen the position of the industry. During the reporting period, the company's communications business revenue declined due to operators' comprehensive promotion of public bidding and procurement, lower competitor qualification thresholds, and overall price declines. The company continues to consolidate the communication network construction technology service business, actively expand communication planning, design, survey, optimization, consulting, and communication engineering services, and continuously seek new development opportunities to develop towards application, big data, and technology. In the first half of the year, the company won bids for a number of projects, including the Guangxi and Fujian government and enterprise informatization consulting service procurement projects. The game business is developing in depth. Junmeng's consolidated revenue increased compared to the same period last year. Mochicaka merged, and revenue and net profit increased dramatically. During the reporting period, the company strengthened the development and operation of Shanghai Junmeng and Mochikaka game products to further enhance the depth and breadth of the company's game IP commercialization capabilities: 1) The two mobile games “Ragnarok RO: Revival” and “Ragnarok RO: Guarding Eternal Love” were adapted and developed by Shanghai Junmeng. The total revenue share of the two games during the reporting period exceeded 100 million yuan. In addition, there are 3 game projects under development that have not yet been launched, namely “Battle of the Three Kingdoms,” “SNH48 Dream Academy,” and “Global Voyage,” which will be officially commercialized in the second half of the year. 2) In January 2017, Mochicaka was included in the scope of the company's consolidated statements. In the first half of the year, Mochicaka achieved net profit attributable to the parent company of RMB 222.11,700, driving a significant increase in the company's revenue and profit. In addition, Mochikaka has obtained mobile game adaptation rights for the famous martial arts IP “Condor Trilogy” and “SNH48,” which are expected to be launched in the third quarter of 2017 and 2018. “Ragnarok RO: Guarding Eternal Love” has declined, and the company is actively developing next-generation products and developing overseas markets. During the reporting period, Ragnarok RO achieved revenue of 708.954 million yuan, accounting for 33.92% of game business revenue, of which the first quarter of '17 achieved revenue of 53.199 million yuan and the second quarter achieved revenue of 176.964 million yuan. The recharge flow for this game in April was 39.42 million yuan, down 54.18% from the monthly average of 86.02 million yuan for the previous three months, stemming from: 1) As a classic IP mobile game, players in the early stages of game operation were mainly old mobile game players. They were more willing to pay. Most of the new players added in the later stages were new RO players. After this type of product, pay The will is weaker. 2) The new Ragnarok RO game is in a “pioneering period”. The amount of material produced by players themselves through hanging up is far less than their demand for increased combat power. The scarcity of initial materials and equipment led to high payment levels. After a period of operation of the game, the number of players requiring these items declined. 3) In the first two months of release, the version and server of the game were unstable, and some players were lost. We expect that in the future, the company will leverage the IP value of “Ragnarok”, explore the overseas game market for Ragnarok RO products, and gradually launch in Taiwan, Thailand, South Korea, etc. Investment suggestions: Based on 1) In the context of the gradual rise in customer acquisition costs in the Internet industry, companies that prioritize high-quality IP will gain a card position advantage in increasingly fierce competition. The company will gradually enhance the depth and breadth of game IP commercialization capabilities by joining hands with Mochika Card and Shanghai Junmeng. The expansion of IP value and the use of underlying big data platforms will become key points for the company's performance improvement; 2) Through continuous mergers and acquisitions and investment in the past two years, the company is expected to achieve leapfrog development in the future through various methods such as extended mergers and acquisitions and shareholding. We judge the company's ability to quickly implement the cultural and entertainment industry value chain construction strategy plan and build a leading pan-entertainment brand. We expect the company's 2017-2019 EPS to be 0.49 yuan, 0.66 yuan, and 0.89 yuan respectively, giving the company a double valuation for 2017, corresponding to the target price of 16.17 yuan, and a buying rating. Risk warning: Financial and goodwill impairment risks, policy and market risks arising from failure of new game development and operation, brain drain, mergers and acquisitions.