Guide to this report: The short-term recovery of the outbound travel business is hampering performance. The company focuses on internal tourism circulation and the Hainan market, and the duty-free business layout is expected to accelerate. Key investment points: The interim report met expectations and increased holdings. Considering that the impact of the epidemic on outbound travel is difficult to recover in the short term, the 2020/21/22 EPS was lowered to -0.27/0.04/0.19 (-0.07/-0.20/-0.13) yuan. The company focused on the internal travel cycle. The duty-free layout is expected to accelerate, giving a valuation of 87xPE higher than the industry average in 2022, and raising the target price to 16.55 yuan. Performance summary: In 2020H1, the company achieved operating income of 889 million/ -67.65%, net profit loss of 118 million yuan, profit of 62.44 million yuan in the same period last year, loss of 126 million yuan in non-net profit deducted from mother, and 17.51 million yuan in the same period last year. The outbound travel business has completely stagnated, and it is expected that it will be difficult to recover during the year. ① Revenue by business: 85.33 million/ -47.52% of the wholesale business, 426 million/ -73.47% of the conference business; ② The profit margin of the product is relatively stable, the gross profit margin of the wholesale business is 16.96% /+0.83pct, retail business 16.31% /-0.36pct, and the prize business 16.67% /+3.59pct; ③ Cash flow: As of June 30, 2020, the company's book capital was 390 million yuan (19H1 was $1,245 million) ), 20H1 cash flow from operating activities — 127 million. Focusing on the internal tourism cycle and the Hainan market, the duty-free business is progressing steadily. ① Under the impact of the epidemic, the company adjusted its strategic operation direction throughout the year: create high-quality domestic travel; explore new travel scenarios, strengthen private traffic operations; enter offline lifestyle experience stores; ② the company reached strategic cooperation with Sanya Municipal Government, Hainan Rubber and many other Hainan companies to provide many travel products and services; ③ the company participated in the implementation of a duty-free shop project in Beijing and established Tongsheng Sega Duty Free Group in Haikou, which is expected to participate in the Hainan Island duty-free business in the future. Risk warning: Overseas epidemics continue, outbound travel cannot recover in the medium to long term, and there is a risk of repeated domestic outbreaks.