Incident Review released its 2020 interim financial report. During the period, it achieved revenue of 890 million yuan (-67.65%), loss of performance to mother of 118 million yuan (-288.62%), deducted non-return performance loss of 126 million yuan, and EPS-0.15 yuan. Among them, Q2 achieved revenue of 137 million yuan (-90.69%), a decrease of 81.86% from Q1; a loss of 53.56 million yuan (-266.33%) to the mother, an increase of 16.59% over Q1; and a loss of 57.395 million yuan after deducting non-return to mother, a decrease of 10.96 million yuan compared to Q1 loss. The main business was affected by the pandemic and showed a sharp downward trend. Q1 The domestic epidemic was strictly prevented and controlled, the number of flights of various airlines decreased, and demand for airline catering declined. The company's main catering business achieved revenue of 188 million yuan (-64.16%), and the travel service business achieved a significant decline of 6.81% (-69.36%) in revenue. With the resumption of travel agency business across provinces, the company's performance is expected to gradually recover in the second half of the year. Focus on Hainan and go deep into the duty-free market. During this period, the company signed a cooperation agreement with the Sanya Municipal Government. The two sides will carry out in-depth cooperation in tourism business, etc., to help the rapid development of Sanya's tourism business. Following the investment in the Tianjin International Cruise Home Port Import Duty Free Shop and the Jiangsu Nanjing Chinese Duty Free Shop project, the company gradually strengthened its layout and operation management in the duty-free sector in Beijing during the period. The revenue scale declined due to the pandemic. The company achieved a gross profit margin of 20.35% (-0.11pct) and an overall expense ratio of 36.52% (+17.59pct) during the period. Among them, the sales expense ratio was 19.4% (+6.59pct) due to a decline in revenue scale and a reduction in operating expenses; the management expense ratio was 10.36% (+6.47pct); and the financial expense ratio was 6.76% (+4.53pct). Investment advice: The company's travel service business is expected to recover in the second half of the year. Recently, there have been many favorable policies for the duty-free industry. The company is building a “tourism+retail” model in Hainan, which is expected to use the duty-free business to boost performance. We expect the company's 2020-2022 EPS to be -0.19\ 0.18\ 0.37 respectively, corresponding to the company's closing price of 14.05 yuan on August 27, and PE of -72.84\ 79.35\ 37.78 in 2020-2022, respectively, to maintain the rating and give an “increase in weight” rating. There is a risk that the impact of the epidemic on the travel industry will exceed expectations; risk of policy changes in the duty-free industry; risk of Hainan Airlines.