The 1H20 performance fell short of our expectations. The company announced 1H20 results: achieved revenue of 332 million yuan, a year-on-year decrease of 66.7%; net profit of net income of 539 million yuan, a year-on-year decrease of 185.9%; net profit after deduction of net profit of 549 million yuan. 2Q20 achieved revenue of 60.96 million yuan, a year-on-year decrease of 87.3%; net profit of net income was 459 million yuan, a year-on-year decrease of 180.4%. The company's performance fell short of our expectations, mainly to confirm the high costs and financial expenses associated with the European Cup. Trends The impact of the pandemic has caused the company's 1H20 revenue to decline. The company's 1H20 revenue declined sharply, mainly due to the impact of the epidemic at home and abroad: in terms of sports business, copyright operations, the 2020 European Cup was delayed due to the pandemic, and the company's corresponding revenue confirmation was delayed until 2021; in terms of sports marketing, the postponement of the 2020 Tokyo Olympics also caused the company's sports marketing revenue to decline, with only 3 projects completed in the first half of the year; in addition, stadiums, sports brokerage and other businesses were also greatly affected by the pandemic. In terms of the film and television business, the company's film and television drama filming plans have been postponed due to the domestic epidemic; at the same time, when cinemas nationwide are closed, the company's cinema revenue has also been affected. Net profit declined sharply due to relatively high fixed costs and high financial expenses. On the cost side, although the 2020 European Cup was postponed to 2021, the company had already paid the relevant fees in the early stages and confirmed them during the corresponding benefit period as agreed in the contract, resulting in the company's 1H20 cost being higher than revenue. On the cost side, 1H20 interest-bearing liabilities (short-term loans+long-term loans+payable bonds) totaled 2,711 billion yuan, resulting in financial expenses of 196 million yuan in the first half of the year, which dragged down net profit performance. Furthermore, in the first half of the year, the company confirmed credit impairment losses of 127 million yuan, mainly due to impairment of accounts receivable and other bad receivables losses. In our judgment, it was mainly due to impairment related to film and television series inventory, which also had an impact on net profit. The full-year results are expected to be under pressure, but the sports business is poised to be optimistic about a recovery in 2021. Considering the postponement of major international tournaments such as the European Cup until next year, while the confirmation of the company's revenue is delayed, related fixed costs still exist, and at the same time, financial expenses are expected to result in large expenses, so we expect the company's performance to remain under pressure throughout the year. However, in the face of the adverse effects of the epidemic, the company has made active adjustments. In terms of sports business, the company is speeding up the development of rights for AFC, La Liga and other tournaments. The company said it has now completed the sale of media rights for AFC projects in Indonesia, South Korea, Vietnam, and Taiwan. Looking ahead to 2021, considering that European Cup revenue confirmation boosts performance, and at the same time, the Asian Cup project has also begun to enter the sales cycle, we expect the sports business to bottom out and rebound. In terms of film and television business, the company launched 4 new dramas in the second half of the year. Among them, “Happiness to Ten Thousand Families” is directed by Zheng Xiaolong and plans to complete production in the second half of 2021. We expect to contribute a certain amount of revenue. Profit forecasts and valuations. Considering that the performance of the first half of the year fell short of expectations and the continued downturn in the sports business throughout the year, we lowered our 2020 net profit by 217.9% to -155 million yuan, keeping the 2021 profit forecast unchanged. The current stock price corresponds to a price-earnings ratio of 11.3 times in 2021. Maintaining a neutral rating and a target price of 9.50 yuan, corresponding to 13 times the 2021 price-earnings ratio, there is room for growth of 12.4% compared to the current stock price. Risk The extent of the impact of the global pandemic has exceeded expectations, the performance of mergers and acquisitions has fallen short of expectations, the postponement of the European Cup or impairment of goodwill, cash flow is tight, there is a risk of impairment of film and television inventory, and the progress of new film and television projects has been slower than expected.