1H17 NP +6.7% yoy, 2Q17 -2.8% yoy
　　GFS announced 1H17 net profit of Rmb4,301mn （+6.7% yoy）， implying 2Q17decline of 2.8% yoy to Rmb2,163mn. It accounted for 51% of 2017E DBe and48% of BBG consensus. Earnings were helped mainly by investment gains（+282% to Rmb1,509mn）。 Cost-to-income ratio saw decent improvement of4.0ppt to 44.9%. Net interest income and inv income were the key earningsdriver, +42.6% and +24.0%, respectively. Brokerage, investment banking （IB）and asset management （AM） were relatively weak, down 29.0%, 7.9% and10.2%, respectively. Similar to CITICS, GFS has returned to AA-rating in 2017（from BBB in 2016）， which should help lower costs. BV expanded slightly by2.9%. Maintain Hold.
　　Key business segments
　　Brokerage: Net brokerage commission fees were down 29.0% yoy toRmb2,024mn. Commission rate （DBe） continued to decline, but at amoderate rate of 0.4bps yoy to 4.2bps. Market share of stock and fundsturnover were down 0.46ppt to 5.1%, ranking fifth in the industry.
　　IB: Net IB fees was down 7.9% yoy to Rmb1,347mn. The decline camemainly from weak debt underwriting, with amount down 34.5% and feeincome down 44.2% and lower advisory income （-30.0% yoy toRmb370mn）。 On the equity side, GFS led the industry in IPO underwriting,achieving fee income of Rmb866mn, +57.2%.
　　AM: Net AM fees were down 10.2% to Rmb1,811mn. The company’s ownAM business recorded 11.7% yoy decline, dragged by weaker CAMbusiness （-12.6%）。 GF fund, 51.1%-owned by GFS, recorded 17.4% hohdecline in AUM and 8.2% decline in Op revenue to Rmb1,131mn. PEbusiness was a sweet spot, with Op revenue up 78.3% to Rmb577mn.
　　Net interest income: Net interest income was up 42.6% yoy to Rmb628mn,thanks to lower interest expense, especially from repo （-20.1%） and bonds（-10.0%）
　　Trading: Inv income recovered by 24.0% yoy. The company has an equityinv to net capital ratio of 31.1% （vs. 32.1% in 2016） and non-equity inv tonet capital ratio of 178.6% （vs. 156.6%）。