Key investment events: The company released its 2017 semi-annual report. Comment: Improved gross margin and increased investment income contributed to the company's net profit growth. 1) The company's 17H1 achieved revenue of 4.54 billion yuan, a year-on-year decrease of 37.5%; realized net profit of 381 million yuan, an increase of 26.5% over the previous year; 2) Profit growth was due, on the one hand, to the company's active reduction in low-margin business such as material sales and focusing on the development of high-margin business, which increased gross margin by 6.38 pct to 17.3%. Gross profit increased by 22.59 million yuan despite a decrease in revenue of 2.7 billion yuan; on the other hand, investment income increased 138% to 107 million yuan, including disposal of long-term equity investment of 4961 million yuan (transfer of the digital industry) The park brought about 39 million dollars in investment income). The advantages of content resources are outstanding, and the advantages of offline channels are obvious. 1) The company 17H1 publishes 4,579 books and more than 20 newspapers. The book retail market share has been in the top 6 all year round, with a market share of around 3%. The Hubei Art Society has the highest share of the national art book market, and the Changjiang Art Society has the top three market shares in the industry segment in the country. 2) In terms of channels, the company has now built 77 distribution branches, 394 distribution outlets, and built a total of 1,140 unit libraries in Hubei Province; developed a curriculum support service platform for primary and secondary school students with nearly 4 million users, covering 3,500 teaching sites. The original online publishing platform “Changjiang Chinese Network” has more than 90,000 works and 5.4 million registered users. Earnings forecasts and ratings. We expect the company's 2017/18/19 EPS to be 0.57/0.66/0.73 yuan/share, respectively, corresponding to the current stock price of PE 14/12/11 times. We believe that the performance of the company's publishing and distribution business is stable, and that it may actively explore education and other directions in the future to maintain the “increase in holdings” rating. Risk warning: The process of online reading replacing paper publications is speeding up; policy risks.