1H17 results in line with expectation
　　1H17 revenue was HK$3,296mn, up 2.5% YoY; net profit wasHK$125mn, up 16.4% YoY, to HK$0.11 per share. Results wereas expected. Top & bottom line growth turned positive HoH.
　　Positive results of business transformation. The robustgrowth momentum of brand-driven business outweighed thenegative effect from the decline in sales from its OEM businessresulting from the transformation. By business mode, salesfrom own brands & retailer private labels +8.5% while sales fromblue-chip business -19.1%, accounting for 83% and 17%respectively. By region, sales in China, EMEA and the Americasgrew by 13.1%, 20% and 6.7%. By brand, Cybex, gb andEvenflo recorded 26.8%, 24.8% and 6.7% top line growth.
　　GPM +2.8ppt to 36.3% due to higher sales contributionfrom key strategic brands （gb, Cybex & Evenflo）。 SG&A ratio+2.1ppt resulting from higher marketing expenditures.
　　Trends to watch
　　Further supply chain integration can be expected, and theproposed acquisition of its distributor （announced in July 2017）could add an omni-channel sales platform to its business model.
　　Earnings forecast
　　Maintain 2017/18 EPS forecast unchanged. 2017/18e EPSexpected to +23.1%/20.1% to HK$0.23/0.27.
　　Valuation and recommendation
　　The stock is trading at 17x 2017e & 14x 2018e P/E. MaintainHOLD, lift TP by 6% to HK$4.11 （15x 2018e P/E） due tothe turnaround of top line and bottom line growth; 5.8% upside.
　　1H17 has witnessed a recovery in financial performance, whilethe competitive landscape of durable juvenile products remainstough in China, and the company’s valuation is not cheap.
　　Risks
　　Competition from online brands; growth trend to slow down.