Events/News: Bohai Ferry released its semi-annual report and achieved revenue of 780 million yuan during the reporting period, an increase of 11% over the previous year. Net profit attributable to shareholders of listed companies was 250 million yuan, up 6.76% year on year, and non-net profit attributable to parent companies was 167 million yuan, up 12% year on year. The growth rate of the main passenger roller industry is rising, and the growth rate of passenger traffic is increasing. In the first half of 2018, the company's passenger rolling ships completed passenger traffic of 1,299,700 people, an increase of 9.6% over the previous year, a slight increase from the 8.1% growth rate in the first half of 2017. In terms of vehicle transportation, passenger transportation completed 311,000 vehicles and 56,200 cargo rolls. Total vehicle transportation increased 6.4% year-on-year, and the growth rate was lower than the 11% growth rate of 1H vehicle traffic in 2017. The main reason is that the cargo roller Bohai Pearl was put into operation in the first half of 2017 in February, and no new goods were launched in the same period this year. Consumption of luxury cruise ships has been downgraded, travel agency charters have been suppressed, and the cruise market has experienced negative growth, and high-end foreign-funded luxury cruise ships have gradually withdrawn. According to data from the China Ports Association, in the first and second quarter of 2018, the number of ships docked at major cruise terminals was 249 and 236, down 15% and 14% from the previous year, showing negative growth for the first time. Influenced by travel agencies' charter model distribution model, the domestic cruise market has been “ruined.” The trick of booking cruise tickets the later the cheaper has become deeply entrenched in the hearts of the people. Scalpers have further lowered ticket prices by shorting cruise ticket profits. Affected by this, foreign-funded high-cost luxury cruise ships have withdrawn or reduced their services one after another. Ctrip's joint venture Tianhai New Century Plan and the closure of the cruise joint venture Tianhai Cruises in the fall of 2018. Costa Victoria, which has served the Chinese market for 6 years, will leave China. Shengshi Princess, a subsidiary of Princess Cruises, will be transferred to Australia in the second half of 2018, and the Novi True Joy will be transferred to Alaska starting in 2019. With the withdrawal of foreign investment, the competitiveness of Bohai Ferry's local low-cost cruise ships is expected to improve. The purchase cost of the “China Taishan” ship owned by Bohai Ferry in 2014 was 43.68 million US dollars, carrying about 927 people, and the purchase cost for one person was only 47,000 US dollars/person. The luxury cruise ship Ocean Quantum, which serves the domestic market, costs 943 million US dollars, carries 4,905 passengers, and costs 192,000 US dollars/person per person, four times that of the China Taishan under Bohai Ferry. In terms of crew, Bohai Ferry is dominated by Chinese crew, and operating costs are significantly lower than that of international cruise ships. Against the backdrop of declining cruise consumption, aging cruise passengers, and insufficient consumption of passengers onboard ships, foreign-funded high-end, high-cost luxury cruise companies are gradually withdrawing, and the competitiveness of local low-cost cruise ships is expected to increase. The renminbi depreciated, and exchange losses dragged down performance. The company's luxury cruise lines and international shipping routes between China and Korea are in debt in US dollars, affected by exchange losses. 1H's financial expenses in 2018 were 14.85 million, compared to -5.965 million in the same period last year. The increase in financial expenses was mainly affected by the depreciation of RMB and exchange losses. 1H had an exchange loss of 5.24 million in 2018 and an exchange gain of 12.21 million yuan in the same period last year. Profit forecast and investment advice: The company's 2018 1H performance is in line with our expectations, the company's employees have completed the purchase of shares, passenger transportation has maintained a steady growth rate, and the cruise business is likely to exceed expectations. We have maintained the original profit forecast for 18/19 and added a profit forecast for 2020. The company's net profit for 2018-2020 is estimated to be 412 million yuan, 454 million yuan, and 497 million yuan, corresponding to PE 11 times, 10 times, and 9 times. Maintain the “Overweight” rating.