Revenue grew rapidly, and the gaming and sports business went hand in hand 1) 2018H1 achieved operating income of 1,638 billion yuan, an increase of 25.58% over the previous year, and net profit attributable to the parent company of 141 million yuan, a decrease of 14.32% over the previous year. The company's net profit declined year-on-year during the filing period, and the main Q1 non-recurring profit and loss items declined year-on-year compared to the same period last year. Excluding the impact of 2018Q1, the company's net profit for Q2 increased significantly by 138.35% over the same period last year. 2) The gaming sector grew the fastest, achieving revenue of 867 million yuan during the reporting period, up 34.97% year on year, with main business revenue accounting for 52.96%; soccer club business achieved revenue of 483 million yuan, up 33.13% year on year, accounting for 29.51%; toy business achieved revenue of 259 million yuan, down 11.11% year on year, accounting for 15.82%. Gaming and sports business revenue grew rapidly, boosting the company's performance. High-quality IP combines advanced R&D capabilities, and is deeply involved in segmentation to create industry leaders 1) The company has established a diverse IP resource matrix covering literature, comics, film and television, etc., focusing on deep integration with film, television, and animation. In the future, we will further focus on segmented categories such as SLG and 2D, lay out post-00 and female game categories, strengthen brand and channel building, focus on R&D capabilities, and deepen market segmentation. 2) Thanks to the brand licensing of world-renowned automobile brands and the company's advanced internal R&D capabilities, the company adheres to a high-margin strategy in the toy business, with significant marginal safety advantages. Industry segments have been adjusted dynamically, and the strategic benefits of internationalization have been highlighted 1) The benefits of the game's overseas business have been remarkable, and domestic and overseas flows have continued to grow. The monthly turnover of “Legend of the Three Kingdoms: A Promise of Overlord” continued to be around 100 million yuan during the reporting period. “The Age of Blue” was first launched in March, ranked 9th in the best-selling game list in China on the Apple App Store, ranked 1st in role-playing games, and was promoted by dozens of mainstream game channels, with a daily turnover of nearly 10 million yuan; “Three Kingdoms M” has been ranked in the top 10 best-selling game rankings since its launch (App Annie data), and won 7th place in the China Mobile Game Overseas Attraction List. 2) The H1 sports business had revenue of 484 million yuan, of which 216 million came from television broadcasting rights and 268 million from sponsorship and advertising revenue. The total value of Espanyol club players rose further to 110 million euros. Investment recommendations We estimate that the company's profit for the 2018/19/20 exam preparation will be 346/4.14/532 million yuan, respectively, corresponding to 14/12/9 times PE during the same period, covering the “increase in holdings” rating for the first time. Risks indicate policy regulation risks, game distribution progress falling short of expectations, etc.