Main points of investment:

The development of the National Wetland Park is accelerated and the quality of the new town is improved at the right time. 1) Lianhua Lake National Wetland Park is adjacent to the north of Tieling New City. the park has gradually entered a mature period since 2012. at present, the number of visitors has increased rapidly and has exceeded 600000 in 13 years. Due to the lack of water system and wetlands and the relatively serious pollution of heavy industry in Northeast China, Lianhua Lake is of great attraction to the surrounding residents. Tieling municipal government will further increase the park catering, accommodation, public transport and other supporting construction this year, in order to further attract the growth of tourists. At the same time, the second phase of Lianhua Lake Wetland Park has been launched, and it is planned that by the end of 2020, the area of the park will exceed 30 square kilometers. 2) with the construction and maturity of Lianhua Lake National Wetland Park, on the one hand, the natural ecological environment and business atmosphere of Tieling New Town have been improved, and at the same time, the increase in the number of tourists will also bring more popularity and business development opportunities to Tieling New City. jointly promote the value of land and housing in Tieling New Town near the lake.

Lianhua Lake area is becoming more and more mature, and the expansion of the new town will come naturally. 1) Tieling New Town has a planned area of 22 square kilometers. At present, only about 1.8 square kilometers (2700 mu) south of Fan River has not yet been completed and developed, and the company's new business needs to be expanded urgently. 2) at present, with the mature development of Lianhua Lake Wetland Park, commercial supporting activities such as lake sightseeing, entertainment, catering and accommodation have been established and become increasingly active. The next step is that Tieling New Town will expand to Lianhua Lake and its surrounding areas. 3) it is estimated that the supporting land available for development in the area around Lianhua Lake is about 20000 mu, which is equivalent to 20 times the current annual land sales of Tieling New Town, which can be used for tourism, pension, commerce and high-end housing in the future. Once the expansion of the new town is realized, the company has a natural competitive advantage in undertaking the first-level development of land near Lianhua Lake. If the company can undertake the first-level development of this part of the land, RNAV will be greatly improved.

Investment suggestion: the development of Lianhua Lake National Wetland Park is becoming more and more mature, which will accelerate the value of the land near the lake, and the expansion of Tieling New Town will be natural. The company's current valuation is lower than the industry average and maintains an overweight rating. At present, the development of Lianhua Lake National Wetland Park is becoming more and more mature, and the natural ecological environment and business atmosphere have been improved, which not only promotes the value of land and housing in Tieling New City near the lake, but also brings the need of Tieling New Town expansion.

If the company can undertake land-level development in the expanded area, the RNAV will be greatly improved. Regardless of the impact of district expansion for the time being, we estimate that the EPS of the company in 14-16 is 0.73,0.73,0.74 yuan respectively, and the corresponding PE is 6.5,6.5,6.5 times respectively, which is lower than the average level of 22 times of the primary development company.