1H17's performance fell 11.0%. In line with expectations, Beiba Media announced 1H17 results: operating income was 1.81 billion yuan, up 16.4% year on year; net profit attributable to parent company was 45.31 million yuan, down 11.0% year on year, corresponding to earnings of 0.06 yuan per share, in line with expectations. Gross margin declined by 2.9ppt year on year, mainly due to the increase in the share of automobile dealership revenue with low gross margin; the sales/management expense ratio decreased by 0.4/0.8ppt, respectively, mainly due to the rapid increase in revenue from 4S stores. Trends The advertising business has declined slightly. Focus on the progress of signing new contracts. 1H17 advertising revenue fell 5.5% year over year to 213 million yuan, mainly due to the large decline in the digital TV business. Body advertising remains steady. The number of 1H17 double-decker cars increased by 56% to 1,454, which will lay the foundation for performance growth after gradual commencement of operation. The company is about to sign a new car body advertisement use rights contract with the public transport group. The new agreement may have a certain impact on the development of the advertising business. The car service business is growing steadily. Revenue from 4S stores increased 28.5% to $1.36 billion, mainly due to the addition of one store during the same period. Furthermore, car leasing and scrapping businesses achieved relatively rapid growth of 13.2% and 27.6%, respectively. The macroeconomy picked up in 2017, and the car service business is expected to maintain steady growth. Electric bus charging stations are already in operation. 1H17 has put into operation 14 charging stations, totaling 113 charging stations, and achieved revenue of 8.27 million yuan. The utilization rate is expected to increase further in the second half of the year, thereby increasing the gross profit margin. The second phase of the charging station project has begun, and it is planned to build another 400 charging stations. However, due to site and power supply conditions, construction progress has fallen short of expectations, and buses will also be delayed. The public transport group will promote about 12,000 electric buses by 2020, and the monopolistic charging business will gradually contribute profits in 2018. The driving school business is expected to pick up during the summer. 1H17 revenue decreased 25.6% year over year, and gross margin declined by 2.4ppt. The impact of the driving training industry's self-study and direct examination policy and the relief of the foreign population in Beijing continues, and the number of students enrolled in driving schools has declined further, leading to a decline in both revenue and gross margin. The company's main target customers have changed to fresh graduates, and peak summer performance is expected to improve. Profit forecast Since charging stations are progressing slower than expected, we lowered our 2017/18 EPS forecast by 5/15% to 0.16/0.20 yuan. Valuation and recommendations Currently, the company's stock price corresponds to 2017/18 41/33x P/E. Based on the segmented valuation method, the target market value was switched to 6.52 billion yuan in 2018, and the target price was raised by 0.3% to 8.08 yuan (dividend exclusion adjustment), with a potential increase of 23.6%, maintaining the recommended rating. The construction of risky charging stations has slowed; the new contract for the advertising business has led to a decrease in gross margin.