The investment suggests that the company's film and television business has entered an upward channel, but investment income still accounts for a high share of profit. Furthermore, the impact of industry regulatory uncertainty brought about by the “yin and yang contract” incident still exists. We believe that the current stock price basically reflects the company's reasonable value, the rating has been lowered to neutral, and the target price has been lowered to 5.73 yuan. The reasons are as follows: performance is generally in line with expectations, and net profit declined due to a decline in investment income. The company announced results for the first half of 2018, with operating income of 2.122 billion yuan, YoY 44.77%; net profit of 277 million yuan, YoY -35.54%, falling into the middle of the interim report forecast range. The decline in profit is mainly due to a decrease in investment income. In the first half of 2017, the company sold 26% of Yinhan Technology's shares and confirmed investment income of 540 million yuan. Non-profit and loss reached 330 million yuan, while the investment income for the first half of this year was only 49.39 million yuan. The film and television business is recovering strongly, and the progress of the live entertainment business is slowing down. The company withheld 252 million yuan in non-net profit in the first half of the year, an increase of 151.29% over the previous year. Among them, the film, television and entertainment sector achieved revenue of 1.96 billion yuan, an increase of 95% over the previous year, accounting for 92.5% of the company's total revenue. “Fanghua” and “Former 3” achieved box office sales of 220 million yuan and 1.64 billion yuan respectively during the reporting period. Meanwhile, revenue from the brand licensing and live entertainment segments fell 28% year over year. In addition, the company's three expense rates all decreased year on year. Among them, the sales expense ratio decreased by 4.5 pct to 13.4% year on year, and the management fee rate decreased by 4.7 pct to 12.9% year on year. The company's investment income accounts for a relatively large share, and there is uncertainty about the pace of confirmation, and the corresponding valuation of recurring net profit is too high. Over the past three years, investment income has contributed most of the company's net profit. We expect the company's investment income to be 300 million yuan this year, mainly considering Hero Entertainment's contribution. Excluding this impact, the recurring net profit is approximately $51 million, which is 31 times the corresponding current valuation, which is already higher than the industry average. What is our biggest difference from the market? We are still optimistic that the company's film and television business will continue to grow, but the impact of industry regulatory uncertainty still exists, and at the same time, if investment returns decline in the future, it will also affect short-term performance. Potential catalyst: The “Yin and Yang Contract” incident has further fermented, and investment returns have been drastically reduced. The profit forecast and valuation are based on the above analysis. We lowered the 2018/2019 net profit by 37%/36% respectively to 643/795 billion yuan, YoY -22.4%/23.7%, and the corresponding P/E for 18/19 was 24.6X/19.9X. At the same time, we downgraded the company's rating to neutral and lowered the target price to 5.73 yuan. The corresponding price-earnings ratio for 2018/2019 is 24.7X/20.0X, which has room for 0.7% increase compared to the current period. Risk supervision policies are being tightened, movie box office growth falls short of expectations, and investment target performance falls short of expectations.