20H1's performance exceeded expectations, benefiting from the good performance of “Dream Three Kingdoms”. 20H1 achieved revenue of 475 million yuan (+61.6%), net profit of 210 million yuan (+146.2%), net profit of 210 million yuan (+146.2%), and net profit of 177 million yuan (+130.4%) after deducting non-return net profit of 177 million yuan (+130.4%). Among them, Q2 revenue was 232 million yuan (+46.7%), and net profit was 113 million yuan (+48.5%). This is mainly due to the increase in the operating flow of various games, such as the “Dream Three Kingdoms” mobile game and the “Dream Three Kingdoms” reprint, and the inclusion of Yudong Network in the scope of financial statement consolidation. The new product cycle led to an increase in profitability. The cost ratio decreased to varying degrees in 20H1, and the gross profit margin was 86.6%, up 2.9pct from the previous year. The sales expense ratio was 17.9% (-4.5pct), and game promotion expenses increased compared to the same period last year. “Dream Three Kingdoms” is an established end transfer product with IP support, and the promotion cost ratio is relatively small; the management fee rate is 8.0% (-6.8pct), driven by the scale effect of rapid revenue growth; the R&D cost rate is 15.6% (-2.5pct). The increase in R&D personnel and the integration of mobile networks has led to a significant increase in R&D expenses compared to the same period, but the overall increase in R&D investment was less than the increase in revenue. The total cost rate for the three categories was 41.5%, a year-on-year decrease of 13.8 pct, mainly due to the high performance elasticity brought about by rapid revenue growth. There are sufficient game reserves in '20, with high certainty of growth throughout the year 1) The “Dream Three Kingdoms” replay contributed to the full performance of 20 years: since the “Dream Three Kingdoms” replay was launched on all platforms on July 19, 2019, high revenue can be expected in 20 years; 2) Sufficient game reserves in 2020, including “My Knight,” “X2 Demon Demon,” and “DC: Pinnacle Battlefield”, and “DC: Pinnacle Battlefield”, became a strong driving force; 3) Gaming Network's high performance commitment, 20-21; Due to domestic 20195 After a month, in principle, no version of Gong Dou or Guan Dou games will be granted, which will help prolong the life cycle of existing games in Youdong. Investment advice: Be optimistic about the new product cycle to drive performance growth, maintain “buy” ratings, and maintain profit forecasts. We expect revenue of 10.8/12.3/1.38 billion yuan in 2020-2022, net profit of 3.6/4.6/5.0 billion yuan; diluted EPS of 1.48/1.86/2.04 yuan. The current stock price corresponds to PE = 31/24/22x. We continue to be optimistic about the company's high-quality R&D capabilities. Its performance has entered a period of rapid growth and maintained its “buy” rating. Risk warning: risk of the game being delayed; downside macroeconomic risk.