2020H1 achieved revenue of 890 million yuan (-67.65%) and deducted non-net profit of 126 million yuan (-818.05%). The results were in line with previous guidelines. Due to the continued spread of the overseas epidemic, Q2 revenue and profit continued to bottom out, and the inflection point of recovery is still unclear. The company actively develops domestic travel products, hedge against the impact of performance, and continues to pay attention to the company's cooperation and layout in the duty-free field. Maintain an “Overweight” rating. The performance lost as scheduled, and we are waiting for the inflection point of recovery. 20H1 achieved revenue of 890 million yuan (-67.65%), net profit attributable to mother of 118 million yuan (-288.62%), and deducted non-net profit of -126 million yuan (-818.05%) after deducting non-recurring profit and loss. The results were in line with previous guidelines. Looking at a single quarter, 20Q2 achieved revenue of 141 million yuan (-90.40%), net profit to mother of -57.36 million yuan (-266.30%), and deducted non-net profit of 57.39 million yuan (-303.04%). The loss in performance was due to the cancellation of outbound travel groups due to the pandemic and the decline in demand for air and rail catering. As the overseas epidemic continued to spread, Q2 revenue and profit continued to bottom out, and the inflection point of recovery is still unclear. The pandemic has hit the outbound travel business hard, and the profitability of airline catering has declined. Due to the worsening of the overseas epidemic, the company's outbound travel industry is the most affected sub-sector in the tourism industry. The 20H1 catering and travel service business achieved revenue of 188/681 million yuan respectively, a year-on-year decrease of 64.16%/69.36%. In the travel business, wholesale/retail/corporate event revenue was RMB 0.85/4.26/170 million yuan respectively, down 47.52%/73.47%/62.69% year on year. The gross margin of the wholesale/retail/award business changed by 0.83/-0.36/+3.59 pcts, respectively, and wholesale and retail remained relatively flat. In the catering business, airline/railway catering revenue was 130.58 million yuan, down 67.44%/53.85% year on year. Mainly due to the fact that airlines drastically reduced demand for airline catering due to epidemic prevention and control and cost reduction considerations. Affected by this, there was little room to adjust fixed expenses such as wages, energy, depreciation and amortization, and the gross margin of airline catering dropped 15.97 pcts. The retail model has high rigid costs, and the development of domestic travel products can offset the impact of the epidemic. 20H1 has a sales expense ratio of 19.40% (+6.59pcts), a management expense ratio of 10.36% (+6.47pcts), and a financial expense ratio of 6.76% (+4.53pcts). Although the company has drastically reduced operating expenses, rigid costs are still high under the retail model. Faced with the impact of the epidemic, the company adjusted its short-term business plan, focused on the internal circulation of the tourism industry, released a local travel product matrix with the theme of “National Color · Oriental”, and successively launched surrounding travel products covering many core domestic customer source provinces. Domestic travel products are expected to partially offset the performance impact of suppressed outbound travel demand. Focus on opportunities in the Hainan market and participate in the duty-free business layout. The company strategically focuses on the development of the Hainan market. It signed a cooperation agreement with the Sanya Municipal Government in March 2020 to jointly promote tourism business cooperation, change its registered address to Sanya in April, and increase capital for Tongsheng Duty Free and Hainan Caesar. Furthermore, the company continued to lay out duty-free business. In the first half of the year, the company participated in the launch of a Chinese duty-free shop project in Beijing, set up a duty-free business management platform in Haikou, and introduced a number of long-term strategic investors, which strengthened its financial resilience to risks. In July 2020, the new duty-free policy for the outlying islands of Hainan was officially implemented, and the duty-free market is rapidly expanding. The company is expected to deepen cooperation in the field of duty-free and promote multi-channel integration into the tax and tourism industries. Risk factors: The global epidemic continues to worsen, the impact of exchange rate fluctuations, and the progress of duty-free business falls short of expectations. Investment advice: Due to the continued spread of the overseas epidemic, entry and exit restrictions in various countries, and suppression of outbound travel demand, we expect the number of outbound visitors to Q3 to still be at the bottom. We carefully judge that the inflection point of recovery may occur in the second half of next year, so it is expected that the company's performance will remain under pressure during the year. The company is actively cooperating with the duty-free sector, and is expected to share the dividends of the growth in the size of the duty-free market under the trend of returning consumption. It is recommended to focus on subsequent outbound travel recovery points and the company's related layout in the duty-free business. Overall, the 2020-2022 EPS forecast was lowered to -0.21/0.05/0.12 yuan (the original forecast was -0.05/0.23 yuan for 2020-2021, and the new forecast for 2022), maintaining the “gain” rating.