The results for the first half of 2018 were in line with expectations, and Jin Jiang Hotel announced its first-half results: revenue of 9.76 billion yuan, an increase of 6.0% over the previous year; net profit of 556.6 million yuan. The performance for the first half of the year was in line with our expectations. Full service hotels: Revenue increased 13.1% year on year to 1.03 billion yuan, mainly due to the steady growth of self-operated hotels in Shanghai. Yangtze River Hotels began merging in October 2017; profit fell 5.1% year on year to 265.9 million yuan. The average room revenue (RevPAR) growth rates for five-star and four-star luxury hotels reached 8% and 2%, respectively. As of the first half of 2018, the company had 94 full-service hotels. Limited service hotels: Revenue increased 10.7% year over year to 6.83 billion yuan, accounting for 70% of total revenue; profit increased 25.2% year over year to 484.2 billion yuan. The average room revenue of domestic limited service hotels increased 7%, mainly driven by an increase in average daily room price (ADR). Average room revenue for budget and mid-range hotels increased by 2% and 1%, respectively. The company had a net increase of 341 limited service hotels in the first half of 2018. As of the end of the first half of the year, it had a total of 7,035 limited-service hotels, of which 28% were mid-range hotels. Development trends Since July, the growth rate of China's leading hotels has slowed, and the weak macroeconomic economy has put pressure on the growth of the hotel industry. The China International Import Expo (CIIE) is scheduled to open in Shanghai in November. We expect this event to boost Jin Jiang Hotel's performance throughout the year. Earnings Forecast We maintain our 2018 and 2019 earnings forecasts. The valuation and recommended current stock prices correspond to price-earnings ratios of 13.4 times and 13.3 times in 2018 and 2019. The recommended investment rating was maintained, but the target price was lowered by 19.5% to HK$2.80 (the current stock price has room to rise by 24.3%) to reflect weak market sentiment. Our target prices are based on the segment additive valuation method. Risk spending has further slowed; costs have risen.