Event: The company released its semi-annual report for '19. 19H1 achieved revenue of 1,623 billion yuan, an increase of 18.14% over the previous year; net profit of the mother was 84 million yuan, a year-on-year decrease of 23.92%. Comment: 1. Financial Outsourcing Services+Intelligent Transmission of Information Continues to Grow, and Overall Operation Continues to Advance. The company's main strategy is based on the use of communication elements to empower various industries such as the Internet and finance. Currently, the company's main business is operated by three wholly-owned subsidiaries, Chuangshimandao, Changshi Communications, and Jiahua Information. It is mainly divided into four categories according to business type. Among them, the communication network maintenance business had revenue of 749 million yuan (YoY -16.32%), intelligent information transmission revenue of 491 million yuan (YoY +17.88%), financial services outsourcing revenue of 140 million yuan (YoY +572.24%), and software development and application revenue of 12 million yuan (YoY -66.21%). In terms of gross margin, communication network maintenance business is 12.14% (YoY -3.8pp), intelligent transmission of information is 21.35% (YoY -2.76pp), financial services outsourcing 26.62% (YoY +5.8pp), and software development and application 17.19% (YoY -14.4pp). The intelligent information transmission business is growing steadily, mainly due to the increase in the volume of customer information sent on the Internet, e-commerce, finance, etc., and Genesis Manway, a subsidiary mainly engaged in this business, achieved a 25.11% year-on-year increase in revenue, exceeding the industry average growth rate. However, since 2018, Unicom and Telecom provinces have successively implemented SMS settlement across provinces, Unicom and Telecom's SMS transmission costs have increased dramatically. At the same time, during the reporting period, phone bill payment revenue and costs have increased dramatically. The operating costs of Genesis Ramada increased by 47.03% year-on-year, and the cost increase was higher than revenue, leading to a decline in gross margin. As for the decline in gross margin brought about by the increase in channel tariffs, the company will reduce costs by seeking preferential prices and preferential channels, adjust SMS service prices in due course, and accelerate the recovery of accounts receivable to enhance profitability. We expect the company's gross margin to stop falling and profit return to positive growth, which is worth looking forward to. The decline in communication network maintenance business is mainly due to Changshi Communications, on the one hand, lower orders than expected in some provinces. On the other hand, the industry is at the end of 4G network construction. In the first year of 5G network launch, the operator's business is at an inflection point in the cycle. We expect that with the acceleration of 5G network construction, this segment of business is expected to bottom out and rebound. Financial outsourcing services are growing well, mainly because Jiahua Information began merging companies in June '18. 2. Empowering the industry scenario with the foundation of cloud communication, the company's vision of promoting the troika to drive together is to create different operating scenarios in a B2B2C manner and welcome the 5G and artificial intelligence era based on cloud communication. Following this line of thought, the company has basically completed the troika in the past few years: completed mergers and acquisitions, entered the first tier of enterprise SMS service providers in China, and actively laid out scenario applications. Profitability is expected to continue to improve; Merger and acquisition of Changshi Communications to become the first tier of network maintenance service providers in China, and build 5G stations for the 5G era Resource pool, 5G card; mergers and acquisitions of Jiahua Information, based on the rapid development of mobile payments, use of its own communication resources to gradually participate in artificial intelligence applications, and fintech business efficiency is expected to improve dramatically. Profit forecast and investment recommendations: The company's restructuring business has been completed, and a successful transformation from traditional retail and real estate industries to communication service industries has been achieved. Currently, the company is positioning itself as a leading cloud communication scenario operator in China. It will use the acquisition of Jiahua Information in 2018 as an opportunity to integrate Genesis Channel and Jiahua Information SMS services to improve cloud communication capabilities, and at the same time combine the newly acquired external call center cloud communication services, use big data and artificial intelligence technology to provide capacity output for financial enterprises, create leading domestic cloud communication scenario operators, and forward-looking deployment of 5G base station site resource pools for 5G, with broad prospects. The troika goes hand in hand. We are optimistic about the company's medium- to long-term development. Considering the pressure on the cost side of some of our businesses this year, we lowered our net profit in 2019-2020 from 399 million to 507 million yuan to 290 million yuan to 380 million yuan, maintaining an increase in holdings rating. Risk warning: Listed companies confirm the risk of greater goodwill and impairment of goodwill, risk of poor asset integration, and the SMS industry faces industry competition to further reduce gross profit margin