Investment points: The company's performance in the first half of the year was in line with expectations: operating income was 239 million yuan, a year-on-year decrease of 5.76%; net loss attributable to listed companies was 3,6199 million yuan, a year-on-year decrease of 233.75%, mainly because in the first half of last year, the company received compensation of about 3,000 yuan for the demolition of a roast duck restaurant in Xi'an; deducted a net loss of 10.1567 million yuan, a sharp loss of 13.962 million yuan; and EPS of -0.0073 yuan/share. The main business continued to be under pressure. Strict cost control during the transition period and the rise of popular restaurants led to a slow recovery of the industry. The company actively transformed, promoted takeout, small specialty stores, and popular consumer varieties, and broadened sales channels. Revenue and gross margin were affected to a certain extent. In the first half of the year, the company's food service revenue was 188 million yuan, down 12.2% year on year, and manufacturing (food) revenue was 121 million yuan, down 6.1% year on year. According to a comparable caliber, the company's comprehensive gross margin increased by 4.03pp to 38.8%, mainly due to a 1.32pp to 34.0% increase in food service gross margin and 3.15pp to 15.6%; the total cost ratio for the period fell by 1.83pp to 37.8%, of which sales expenses decreased 8.9% and the expense ratio decreased slightly by 1.06pp; management expenses increased sharply by 11% and the cost rate increased 1.08pp; the introduction of capital raised drastically reduced financial expenses by 107.1% to 312,000 yuan. The fixed increase was approved under conditional review, and the leapfrog development can be expected. The company's non-public offering plan to acquire 100% shares in the Beijing restaurant chain “Jiahe Yipin” was conditionally approved by the Securities Regulatory Commission in July. The company also signed a preliminary letter of intent for cooperation with the national coffee chain brand Diocaffe. In the future, management will vigorously promote capital operations, accelerate the pace of mergers and acquisitions, and achieve sustainable leapfrog development of the company. The investment proposal takes into account the comprehensive impact of the increase in distribution. We forecast that the basic EPS for Xi'an Diet 15/16/17 will be 0.05/0.07/0.09 yuan, and the corresponding PE will be 181.5/141.8/105.8. Performance promises and related compensation clauses in the acquisition agreement are more stringent, and the reward clauses are more generous, reflecting better performance expectations. Under the slowing of the country's macroeconomic growth rate and the continuing effects of a series of measures such as the Eight Regulations and the implementation of savings, the restaurant industry has entered a new normal, and the company's main business continues to be under pressure. If profits from disposal of current assets are excluded, the profit side has been in a loss for 14 years. In this regard, on the one hand, the company is actively promoting the transformation and adjustment of “popularization” of business, and on the other hand, it is seeking external expansion and integration of market resources, with a precise strategic direction. At the same time, the company is in a strategic region along the Belt and Road, and at the same time falls under the target of state-owned enterprise reform. It is recommended that active attention be paid to the extended M&A process. Give an increase in holdings rating. Risk warning: M&A target performance falls short of expectations; M&A process falls short of expectations; food safety issues.