Revenue declined slightly due to the impact of market and tax reforms. The company's 17H1 achieved revenue of 864 million yuan, down 1.14% year on year; net profit of 76.8 million yuan, up 8.68% year on year; and EPS was 0.249, up 8.69% year on year. The decline in the company's revenue was mainly affected by market and tax system reforms. The catering business achieved revenue of 644 million yuan (-0.56%) in the first half of the year. Among them, food and beverage revenue during the reporting period during the Spring Festival Golden Week and the four short holidays increased 5.82% year-on-year; product sales revenue was 196 million (-3.30%). The increase in net profit is mainly due to the company's strict control of costs and expenses. Gross margin has been growing steadily, and the cost of increasing marketing efforts has risen slightly. The company's 17H1 consolidated gross profit margin was 62.53%, an increase of 2.89 percentage points over the previous year, mainly due to the company's strengthened cost control; among them, the catering business was 66.48%, an increase of 2.81 percentage points over the previous year; and the product sales business was 46.77%, an increase of 2.83 percentage points over the previous year. The cost rate for the period was 50.70%, an increase of 3.81 percentage points over the previous year; among them, the sales expense ratio was 36.59% (+3.17pct), mainly due to the company's increased marketing efforts and increased labor costs; the management expense rate was 13.98% (+0.92pct), mainly due to the increase in labor costs due to the company's strengthening of human resources recruitment and talent training and development; the financial cost rate was 0.12% (-0.27pct), due to the increase in online Internet payments, and the reduction in processing fees due to lower fees. Stores are expanding steadily, and store segmentation is managed in a refined manner. The company maintained a steady expansion of stores during the reporting period, adding 2 direct-run stores, 1 franchise store, 114 member stores, and the national store layout progressed steadily; at the same time, the company actively experimented with store classification operations, dividing existing direct-run restaurants into three categories: tourist stores, community stores, and shopping malls. The business philosophy changed from “one brand to travel the world” to “multiple brands blossom, key regional layout”; deepening the brand management model and promoting the “Internet +” strategy. The company is actively promoting the upgrading of the existing food industry. On the basis of the original sales, the company has set up a brand management center, e-commerce business center and logistics distribution center to optimize the brand image and continue to promote the “Internet +” strategy. In the first half of the year, e-commerce achieved a delivery volume of 23.2 million yuan, an increase of 40% over the previous year; it plans to acquire Tangcheng Little Chef and add a new form of casual catering. The company and Beijing Tangcheng Chef officially signed a “Letter of Intent for Equity Acquisition”. The latter was founded in 2007, with the theme of authentic Guangzhou old hot soup and authentic Cantonese stir-fries. Currently, it has opened more than 10 stores, mainly in Beijing. It has many decorated and fashionable dishes, positioned mid-range public consumption, and is recognized by consumers. As a specialty casual restaurant brand, it will further expand the current business model of the listed company, and the four major traditional restaurants in Sichuan complement each other. The layout of the new casual dining business format is recommended. It was covered for the first time, and a “increase in holdings” rating was given. As an established Chinese catering company, the company is steadily expanding its stores, implementing “Internet +” to actively transform to meet popular catering trends. At the same time, it plans to acquire Tomson Chef to add a new casual catering business format, focusing on the pace of transformation and reform expectations of subsequent companies; we gave the company an EPS of 17-18 of 0.52/0.57 yuan, and the current stock price corresponding to 17-18 PE is 37x/34x, respectively, giving it an “increase in holdings” rating. Risk warning: New store expansion falls short of expectations.