In the first half of 2018, the company's revenue increased 2.8% year on year, and net profit from the parent company increased 57.8% year on year, and the performance exceeded expectations. 1) The revenue of 18H1 company rose 2.8% year on year to 440 million yuan. The gradual emergence of emerging channel advantages led to a 57.8% year-on-year increase in net profit to 83.45 million yuan, and net profit after deducting a 65.9% year-on-year increase to 73.43 million yuan, with strong performance. 2) Sales expenses declined in 18Q2, investment income increased, and performance growth accelerated significantly. In 18Q2, the company's revenue was 220 million yuan, up 13.3% year on year, and net profit increased sharply by 105% to 83.45 million yuan, mainly due to lower sales expenses and increased investment income. Profitability has increased, sales expenses have declined markedly, and overall asset conditions have improved. 1) Social platforms and public communication have replaced traditional channel publicity expenses in an orderly manner, and the company's profitability has improved markedly. The gross margin of 2018H1 company fell slightly by 0.4 pct to 59.8%, and remained stable. A slight increase of 0.7 pct in R&D investment led to an increase in the management expense ratio of 1.3 pct to 8.5%. At the same time, benefiting from emerging promotion and communication advantages such as social e-commerce and KOL, the sales expense ratio dropped significantly by 3.5 pct, leading the net interest rate to rise 6.6 pct to 18.9%, and overall profitability increased significantly. 2) Liquidity has improved, turnover has declined, and the overall asset situation needs to be improved. The turnover ratio of accounts receivable and inventory decreased by 0.85 and 0.09 pct, respectively, compared with the same period last year, and the net operating cash flow increased by 2.28 million yuan over the previous period. Liquidity is improving, but the overall asset situation needs to be improved. The company's traditional daily chemicals business is steady, expanding brand categories and deepening omni-channel layout, and continuously optimizing its own strength. 1) High-end independent brands and beauty agents work together to lead the flourishing development of a multi-brand matrix. 2018H1 is an agent for cosmetics, such as Replatz and Delper. Revenue increased sharply by 502% year over year, and the growth rate was strong. Its high-end brands, Medos and Mansiana, achieved revenue of 96.4 million yuan and 5.06 million yuan respectively, up 32% and 18% year-on-year, and built a multi-brand matrix. 2) The KA channel continues to lead the way, actively enhancing the construction of emerging channels such as KOLs on CS and Weibo platforms, and leading WeChat public platforms, and optimizing channel layout. The KA channels represented by Grand Runfa and Wumei performed well during the reporting period. Revenue increased 10% year over year to 130 million yuan, accounting for 30.4%. In the future, the expansion of CS channels in shopping centers based on the Lafang PinGuan Fund is expected to help the high-quality layout of all channels. The company enters social e-commerce through joint ventures, etc., and places equal emphasis on channel construction plus marketing and promotion, and the leading self-media community is in the spotlight, so investment income directly enhances performance. 1) Invest in Suqian Baibao+ Makeup Information to obtain the Maternal and Baby+Beauty Self-Media Community Matrix, and complete the closed loop of its own industry. Suqian Baibao (20% of the company's shares) and Makeup Information (26.8% of the company's shares) each have several leading public accounts for mother and baby and beauty self-media, accurately covering millions of highly sticky fan groups, grasping the social e-commerce dividend trend, and have plenty of potential for the future. At the same time, Makeup Information has its own makeup brand, MeetDay, to help the company enter the beauty field. 2) The net profit of joint ventures increased rapidly, protecting the company's performance. Joint ventures Suqian Baibao, Makeup Information, and Lafang Yijian New Media Industry Fund had impressive results during the reporting period. Suqian Baibao's net profit increased 23.8% year on year. Makeup Information and Lafang Easy Jian achieved net profit of 317 million yuan and 7.59 million yuan respectively. The company achieved a total net investment income of 16.65 million yuan during the reporting period, an increase of 2146% over the previous year. The company is an established leading household chemicals enterprise in China. It has strengthened its brand matrix+expanded new channels, and its main business is steady. Entering into the booming beauty segment is expected to become a new profit growth point in the future and maintain an increase in holdings rating. The company has a strong foundation in the traditional field of daily chemical care, and its profits are steady. In recent years, the company has actively sought change along with changes in the consumption environment, deploying social e-commerce to seize channel dividends, and entering the beauty sector is worth looking forward to. Also, considering that stock options incentivize performance targets and the high growth rate of high-end product lines and agent cosmetics, the profit forecast was raised. The net profit forecast for 18-20 is expected to be 1.85/211/239 million yuan (originally predicted net profit of 1.74/1.84/196 million yuan in 18-20). The corresponding PE was 19/17/15 times, maintaining an increasing rating.