Key points of the report Company profile and horizontal comparison: Focusing on subway operations and a single business structure Shentong Metro is a local state-owned enterprise in Shanghai that focuses on subway operations. Using SMRT (Singapore Metro) and the MTR Corporation as reference targets, the company has significant room for improvement in the local market share of subway operations, the richness of the revenue structure, and the level of single ticket prices. Singapore subway model: subway+commercial is the core, and the higher degree of marketization of the Singapore subway implements the subway+commercial as the core business model. The subway business uses a separate operating model between construction and operation: the government authorizes low prices, and enterprises bear their own profits and losses; subway fares are subject to a restrained fare adjustment mechanism: the formula is transparent and takes into account the interests of enterprises and the public, but the government has a veto power. In addition, the commercial leasing and advertising business carried out by SMRT mainly relies on the company's various mobilizable resources along the 137.6-kilometer subway line. The compound annual revenue growth rate of these two businesses over the past 11 years has reached 16%, and gross margin has remained above 60%. MTR company model: subway+business/property combination, complete market-based operation The MTR company's business combines subway+business and property, and operates according to a complete market-based approach. The subway business uses a public-private partnership mode of operation: the government is local, and enterprises are responsible for construction+operation, so that property feeds back subway operations. The subway fare uses an additionable and subtractable adjustment mechanism: a completely transparent price adjustment mechanism, established based on the magnitude of changes in prices and wages. In addition to this, 1) Station business: “Guangzhou business” is integrated into the trinity, and high profit realizes added value; 2) Property business: Mainly retail properties, feeding back subway operations. Where will Shentong Metro go and where it will go: equal emphasis on main and auxiliary, multiple catalysts. We expect the company's EPS for 2015-2017 to be 0.15 yuan, 0.22 yuan, and 0.25 yuan, respectively. The future focus of Shentong Metro can be summed up as equal emphasis on main and auxiliary, multi-use catalysis: 1) the injection or extension of auxiliary industries, which are still under the group's “Guangzhou Commerce” and property management rights, which are probably the company's biggest future focus; 2) the increase in the main business, the increase in the flow effect brought about by the opening of Disney in 2016; 3) the growth in the main business, the injection of other subway assets within the group; 4) the main business price increase, and the possibility of an increase in subway fares. In summary, we gave the company an “increase in holdings” rating.