In the first half of 2016, the company achieved operating income of 590 million yuan in the first half of 2016, an increase of 115.72% over the same period last year; net profit attributable to the parent company was 194 million yuan, an increase of 38.44% over the same period last year. During the period of rapid revenue growth, gross margin remained at a high level. From January to June 2016, the company achieved operating income of 590 million yuan, up 115.72% from the same period last year, and operating costs of 255 million yuan, up 232.97% from the previous year; main gross margin was 56.86%, which was reduced to a certain extent, but remained at a high level; realized total profit of 233 million yuan, up 39.33% from the same period last year, and realized net profit attributable to shareholders of listed companies of 194 million yuan, up 38.44% from the same period last year. The sharp increase in revenue is mainly due to significant increases in overseas application distribution business and smart hardware product business. It occupies the Internet user portal, and its market share continues to increase. In 2015, Contact OS added 140 million active users, an increase of 68.67%. By the end of 2015, the cumulative number of users of the products operated by the company had reached 659 million. Stable sales channels and a stable market foundation have been established in both domestic and foreign markets. Distribution channels have been continuously expanded, and market share has increased dramatically. Increase investment on the content side and hardware side, and expand monetization channels. The company continues to increase investment on the content side and rapidly increase the company's profitability through high-value-added monetization channels such as games, advertising, and application distribution. A variety of high-quality game products have been successfully created through game agent intermodal transportation. At the same time, overseas game development and distribution teams have been expanded on a large scale, and the overseas game business is gradually becoming a new profit growth point. It successfully raised 4.8 billion dollars to invest in smart hardware projects, greatly enhancing capital strength, relying on a huge and highly sticky OS user group, providing customer resource import channels for the implementation of smart hardware projects, gradually expanding the product line from mobile phones to other smart hardware, realizing the interconnection of users, devices, content and platforms, improving user experience, and building the popularity of the “Connect” brand. Profit forecast and valuation: We expect net profit from 2016 to 2018 to be 1.25 billion, 2.10 billion, and 3.32 billion yuan, respectively, EPS of 0.25, 0.40 and 0.62 yuan, respectively, and corresponding PE of 78, 50, and 32 times, respectively. The company has a large and highly sticky customer base, and occupies the user traffic portal. The content side, overseas channels, and hardware side continue to gain strength, and the performance is good. We are optimistic about its future development and maintain the “recommended” rating. Risk warning: risk of increased market competition, risk of company expansion, risk of loss of personnel, and technical risk.