1H17 results in line with expectation
　　1H17 revenue was Rmb142.5bn, up 6% YoY, of which revenuesfrom continuous operations were up 9% YoY. net profit wasRmb2.7bn, up 4% YoY to Rmb1.15 per share.
　　Trends to watch
　　Continuing to optimize investing portfolio. Legend realizedstrong growth on its strategic investments with moreconcentrated development strategies: 1) sold Phylion &introduced new investors to Levima; 2) financial service revenueramped up >200% due to expanding scale & mature operations;3) restructured agriculture & food segment to integrate thewhole value chain; 4) added EAL and Sanyu Education to itsportfolios to further complete modern service layout. We expectit to maintain stable growth.
　　Financial investments saw operational improvements. In1H17, financial investments contributed net profit of Rmb2.13bn,up 127% YoY, mainly because it exited several invested projects& got decent returns. Hony exited (or partially excited) eightprojects in 1H17 & contributed cash flow of >Rmb860mn (IRR17%); Legend Capital exited ten with Rmb310mn back (IRR35~40%). We believe this segment benefits from more matureoperation on its financial investments and expect stable growth &returns. While Legend still suffers from the financial impact ofLenovo, it continues to optimize its invested portfolio & increaseexposure to emerging business to release downward pressure.
　　Earnings forecast
　　We raise 2017 & 2018 revenue forecasts by 7.6%/7.5%to Rmb315.2bn/315.9bn and net profit by 8.9%/8.8%to Rmb5.3bn/5.5bn.
　　Valuation and recommendation
　　The stock is trading at HK$18.18. We maintain our HOLDrating and HK$22.00 target price based on SOTP NAVvaluation.
　　Risks
　　Weak economic performance; uncertainties in capital market.