In the first half of 2016, the company achieved total operating income of 640 million yuan, an increase of 0.04% over the same period last year; realized net profit attributable to shareholders of listed companies of 27 million yuan, a decrease of 55.34% over the same period last year; and net profit attributable to shareholders of listed companies after deducting non-recurring profits and losses of 23 million yuan, a decrease of 41.33% from the same period last year. The company expects net profit from January to September to change by -30% to 20% year on year. Revenue from various businesses increased slightly, and automotive products declined markedly. In the first half of 2016, the company achieved revenue of 640 million yuan, an increase of 0.04% over the same period last year. Among them, system integration revenue was 318 million yuan, up 0.27% from the same period last year; system product revenue was 96 million yuan, up 9.16% from the same period last year; technology development and service revenue was 226 million yuan, up 2.44% from the same period last year; and vehicle information terminal revenue was 1083 million yuan, down 99.23% from the same period last year. Vehicle information terminal products have declined significantly, mainly due to changes in the business model of vehicle information terminal products. Most vehicle information terminal products are distributed free of charge to users. With the exception of in-vehicle information products, all other businesses have remained stable. There was a slight increase in expenses and a decrease in investment income during the period, leading to a decline in net profit. Both the biocloud project and the Internet of Vehicles project currently under construction are in the investment period, and no profit has yet been generated. Sales expenses and management expenses all increased to a certain extent, by 1.31% and 4.63% respectively, mainly due to the increase in human resources and other expenses such as the expansion of the company's workforce, the addition of real estate taxes, and the purchase of overseas intellectual property to pay lawyers' fees; R&D investment increased significantly in this period, with a year-on-year increase of 5.17%, mainly due to the continued increase in investment in fund-raising projects and non-fund-raising R&D projects. Investment income decreased by 77.85% compared to the same period last year. The main reason is that investment income in the previous period mainly came from equity investment disposal income and was an occasional income. The layout of three business segments: enterprise IT services, big data and Internet of Things, and biocloud platforms. In 2015, the company raised capital through a non-public stock offering to launch the construction of a “bio-cloud computing project to support molecular medicine” and a “comprehensive operation service system project based on multi-dimensional big data in the Internet of Vehicles”. The BioCloud project plans to build a biocloud computing system to support molecular medicine. The Internet of Vehicles project uses big data to build an Internet of Vehicles operation system. The above two projects were officially put into construction at the end of 2015. Subsequent companies will continue to upgrade the layout of the three major businesses, which is expected to bring about a significant increase in performance. Profit forecasting and valuation: The company accelerates the construction of industry-oriented cloud computing platforms, realizes the transformation and expansion of enterprise IT service services, deepens the application of the Internet of Vehicles, strengthens the construction of IoT platforms, and develops the application of big data in various core businesses. We are optimistic about the company's multi-business development in vehicle networking, biocloud, and big data. We expect net profit from 2016 to 2018 to be 219 million, 265 million, and 334 million yuan respectively, EPS of 0.34, 0.42, and 0.53 yuan respectively, and corresponding PE of 70, 58, and 46 times, respectively. Given that the semi-annual report performance fell short of expectations and expected future performance, we downgraded it to a “prudent recommendation” rating. Risk warning: risk of increased market competition, risk of customer concentration, risk of company expansion, risk of loss of personnel.