The performance growth rate was lower than expected. In the first half of 2016, the company achieved operating income of 581 million yuan, a year-on-year decrease of 19.88%; realized net profit of 31,571 million yuan, a year-on-year decrease of 45.83%; and realized net loss of 33.56 million yuan, which was converted to loss year-on-year. The decline in the company's performance was mainly due to pressure from traditional advertising business and value-added business, rising costs, and the suspension of the sale of shares in subsidiaries and the suspension of the Internet lottery business. The traditional advertising business is fiercely competitive, and the information business remains stable. The company's Internet advertising business achieved revenue of 247 million yuan in the first half of the year, a decrease of 10.04% over the previous year against the backdrop of slowing growth in the overall Internet advertising market and increasing competition in vertical segmentation; the information service business achieved revenue of 129 million yuan, an increase of 2.9% over the previous year. In the field of public opinion business, the subsidiary Renmin Online continues to strengthen big data technology services, and has launched a series of products and services such as new media think tank reports, online private cloud platforms, online MOOC platforms, and big data self-service monitoring platforms (crowdcloud), laying the foundation for its transformation into a big data and consulting company. The growth rate of mobile traffic is obvious, and the resumption of lottery tickets still requires policy approval. During the reporting period, the company's value-added business achieved revenue of 201 million yuan, a year-on-year decrease of 27.07%. The main reason was the decline in the value-added business of the subsidiary Guqiang Mobile and the fact that microscreen software was not included in the scope of the merger. The company's mobile traffic is growing rapidly. Mobile People's Online comprehensively uses topics, illustrations, audio and video to report all major news events in a comprehensive, timely, and accurate manner. The average daily UV in June increased 32.2% from the 2015 average. During the reporting period, the Internet lottery platform People and Australian customers had no revenue contributions due to the suspension of business. The specific lottery development date still requires subsequent policy approval. Adhere to the responsibility of state-owned enterprises and build a mainstream new media platform with a high level of brand. In the context of economic transformation and upgrading, media culture has gradually become the focus of current central government reforms, and the government will further use the Internet mentality to create mainstream core media. We believe that People's Online is currently one of the media platforms with the most core brand value in China. The company is expected to actively use its advantages while using policy dividends to implement relevant innovations and reforms, and continue to lay out vertical expansion fields along the industrial chain strategy to create a new media platform with core influence through a series of actions such as endogenous growth and mergers and acquisitions. Risk warning. The impact of economic fluctuations on advertising growth; the risk of revenue fluctuations in the Internet and mobile Internet projects; the risk of new business development. Earnings forecasts, valuations and investment ratings. We maintain the company's 2016-18 EPS forecast of 0.26/0.27/0.27 yuan. The current price is 19.20 yuan, corresponding to 2016-2018 PE 77/75/72 times. Given the company's strategic position in integrating traditional media with emerging media, business layout and media brand height, and the responsibility of the central state-owned media, we maintain the company's “increased holdings” rating.