Key investment events: The company released its 2016 semi-annual report and achieved operating income of 482 million yuan during the reporting period, a year-on-year decrease of 26.60%; net profit attributable to owners of the parent company was 5.937,700 yuan, a decrease of 91.74% over the previous year. The main reasons for the decline in the company's performance are: 1) In the first half of the year, traditional media were under further pressure, and the company's traditional paper media business, both in terms of sales volume and advertising, was severely impacted; 2) The game progressed at a slower pace than expected, and the main product “Voldemort” failed to launch as scheduled. The traditional media business continues to decline, and transformation and upgrading is ongoing: the operating income of the company's three traditional businesses, printing, advertising, and distribution, has declined in the past three years, and the company has taken active countermeasures to promote the “X+ Internet” plan: 1) Building an urban lifestyle distribution service platform. The transformation of the newspaper distribution business to logistics distribution business has begun to bear fruit; 2) the “communalization and networking” transformation of the outdoor advertising business, and the synergy between intelligent digital media, customers, and media resources is gradually showing. We expect that the weak trend in traditional business is gradually being eliminated, and the company's painstaking transformation path is expected to bear fruit in the next few years. New media boutiques are being launched one after another, and performance may explode: the company's boutique mobile games are gradually opening up markets at home and overseas, and this field is also one of the company's most popular highlights. As of June 30, 2016, the company has launched a total of 3 games, “Guardians of the Dragon,” “Dragon Quest,” and “Democratic People for All,” in South Korea, Taiwan, North America, Brazil, etc., and has achieved a total turnover of 341 million yuan. During the reporting period, the company launched 3 new games, and it is expected that 5 games will be put into operation in the second half of the year, including “Curse of Voldemort” and “Battle of Dragons,” which are expected to be an important driving force for improving the performance of the company's game sector. The industrial chain extends, diversification explodes: 1) The performance of the education sector is improving: During the reporting period, Borui Education achieved revenue of 50.326,400 yuan, an increase of 17.40% over the previous year, and business performance gradually increased. 2) The “media+finance” strategy remains unchanged: Although the company announced on June 29 that it intends to terminate the merger and acquisition of Chengdu Xiaobao Company, the overall strategic development direction has not changed, and the media+finance industry layout will be completed at an opportunity. 3) Actively explore new fields: Invest in e-sports companies through funds and participate in shares to establish e-sports project companies, actively intervene in the e-sports field, and benefit the company's medium- to long-term development in terms of both valuation and performance. Profit forecast and investment advice: Since the decline in the paper media industry exceeds our expectations, we lowered the company's profit forecast, and the 2016-2018 EPS is expected to be 0.04 yuan, 0.08 yuan, and 0.12 yuan respectively. Based on the following reasons, we maintain the previous “increase in holdings” ratings: 1) The company may have mergers and acquisitions expectations and continues to complete the media+finance industry layout; 2) Although the company's performance in 2016 is expected to decline, the overall layout is perfect, and new fields such as new media business and e-sports are expected to bottom out and rebound; 3) There are dividends from state-owned enterprise reform, and there is an expectation that the company's traditional business will divest in the future. Risk warning: Gaming business or falling short of expectations; traditional media business may continue to decline.