Event: Bohai Ferry released its 2016 annual report. In the first half of the year, it achieved operating income of 702 million yuan, an increase of 32.01% over the previous year; realized operating costs of 463 million yuan, an increase of 27.34%; realized total profit of 330 million yuan, an increase of 37.63% over the previous year; and realized net profit attributable to shareholders of the parent company of 238 million yuan, 0.49, an increase of 34.47% over the previous year. Non-net profit attributable to listed companies was 149 million yuan, an increase of 73% over the previous year. Opinion: Highway control continues to gain strength, and bicycle transportation volume and prices have risen sharply. Vehicle revenue accounted for 60% of the company's route revenue. In the first half of the year, domestic passenger rolling ships carried 10,000 vehicles, an increase of 3.8% over the previous year; freight rolling ships completed 22,300 shipments, an increase of 11% over the previous year. Based on vehicle traffic data, ticket prices in the first half of the year increased by about 34% compared to last year's average. Bike fares are a typical marginal pricing method, and the increase in loading rate brought about by increased traffic will have a strong supporting effect on freight rates. There is still room for bicycle ticket prices to rise on the basis of unabated highway regulations, improvements in transportation demand along with macroeconomic improvements, and no additional passenger capacity in Bohai Bay. Self-driving tours gained momentum, and the growth rate of passenger traffic changed from negative to positive. Affected by the replacement of modes of transportation, the company's passenger traffic growth rates in 2014 and 2015 were -1.5%, respectively. Self-driving tours have grown rapidly since 2016. Each self-driving tour vehicle can contribute 3-4 additional tickets on the basis of driving vehicle growth. Affected by this, the company's passenger traffic increased by 2.4% and 7.4% in the first half of 2016 and 2017, respectively. July-August is the peak season for passenger traffic, and passenger traffic during the peak season is also expected to exceed expectations. Against the backdrop of the weakening impact of alternative transportation and the increase in the number of self-driving tours driven by consumption upgrades, we believe that the company's passenger traffic is expected to continue to grow steadily. Affected by strained relations between China, South Korea, and the Taiwan Strait, cruise losses increased compared to the second half of '16, and are expected to be profitable in the second half of '17. In the first half of the year, the company operated 50 cruises, an increase of 67% over the previous year; completed passenger traffic of 24,400, an increase of 5% over the previous year. However, considering the reduction in the number of days after a single cruise in the first half of the year, the actual passenger occupancy rate was lower than the same period last year. Using the passenger flow business to reverse estimate, after deducting foreign exchange gains and losses, it is estimated that cruise ships lost about 30 million yuan in the first half of the year, slightly higher than in the second half of '17. Cruise ships will launch routes to Guangxi and ASEAN in the second half of this year, and the cruise business is expected to be profitable. Develop cargo rolling business and improve the utilization rate of ships. After the launch of the “Bohai Pearl” and “Bohai Pearl” and “Bohai Pearl” ships in 2015, the “Bohai Pearl” and “Bohai Pearl” wheels were idle. In August 2016, the company established Tianjin Bohai Ferry Shipping Co., Ltd. in Tianjin to operate cargo transportation business and improve ship utilization. In February 2017, the “Pearl of the Bohai Sea” ship was put into operation as a rolling cargo ship. In the first half of the year, cargo rolling was completed with a vehicle volume of 22,300 vehicles. We believe that the multimodal transport joint venture between the company and Shenzhen International is expected to form a synergy with the freight rolling business and provide a delivery function for the freight rolling business. It is expected that the “Golden Pearl of the Bohai Sea”, which currently has idle capacity, will join the freight rolling fleet next year, which will provide new profit growth points. Benefiting from the appreciation of the RMB, financial expenses have been drastically reduced. The company's exchange earnings for the first half of the year were 12.209 million, and the financial expenses for the same period were negative 5.965 million, compared to 21.28 million for the same period last year. According to information disclosed by the company, in the first half of the year, if the RMB appreciates or depreciates 1% against the US dollar, the company's net profit from January to June 2017 will increase or decrease by 6.34 million yuan. Conclusion: Profit forecasts and suggestions: The company's interim results are basically in line with expectations in our in-depth report “Highway Supervision, Major Increase in Main Business, Extend Multimodal Transport to Increase Growth Space” published in May, slightly higher than Wande's expectations. We believe that the company has benefited from road overregulation and a rebound in domestic trade demand, and is expected to continue the high growth trend in 2017 performance. Against the backdrop of unabated highway control, the company's main passenger ship business will remain in a boom range. In the second half of the year, the cruise business will be invested in the Guangxi market to operate ASEAN routes, and the cruise business is expected to reverse losses in the second half of the year. The company's EPS for 17-19 is expected to be 0.79, 0.89, respectively, and the corresponding P/E is 15X, 13X, and 12X, maintaining the “highly recommended” rating. Risk warning: The economic growth rate is lower than expected