Peace View: Hefei Urban Construction: A municipal state-owned real estate company. The predecessor of Hefei Urban Construction was the Hefei Urban Renovation Engineering Company founded in 1983. It mainly focused on municipal construction and old city renovation. After 1999, it focused on real estate acquisition business. It was the first listed real estate company in Anhui Province, and its business was mainly concentrated in Hefei, Bengbu, Xuancheng, Sanya, etc. Hefei Urban Construction is a municipal state-owned holding company. The Municipal State-owned Assets Administration Commission holds 57.89% of the shares. In March 2015, the Municipal State-owned Assets Administration Commission transferred Hefei Urban Construction shares to Xingtai Holdings. State-owned enterprise reform: the establishment of three major state-owned holding platforms. Hefei's state-owned enterprise reform has a clear context, clear ideas, effective measures, and remarkable results. In 2013, the Municipal State-owned Assets Administration Commission was selected by the State Council's State-owned Assets Administration Commission as one of the first 13 points of contact in the country to guide and supervise work. In October 2014, the Hefei Municipal Committee and Municipal Government issued “Certain Opinions” to establish the three major state-owned holding platforms of Xingtai Holdings, Industrial Holdings, and Construction Holdings. Optimizing the allocation of state-owned capital, setting up government-guided funds, promoting mixed reforms, improving the modern enterprise system, and strengthening the supervision of state-owned assets in districts and counties (mining areas) are the main highlights of the new round of state-owned enterprise reform. Xingtai Holdings: Building a comprehensive financial holding platform. Xingtai Holdings is a regional comprehensive financial holding platform. Its business scope already covers 13 financial and pan-finance fields, including banks, securities, insurance, credit guarantees, asset management, equity transactions, trusts, funds, financial leasing, pawnbroking, venture capital funds, and venture capital. It owns Huishang Bank, Guoyuan Securities, Construction Trust, Huafu Fund, Guoyuan Agricultural Insurance, Xingtai Financial Leasing, Xingtai Asset Management, Xingtai Hong Kong and other companies. As of the end of 2014, Xingtai Holdings had registered capital of 2 billion yuan, total assets of 12 billion yuan, and net assets of 5.6 billion yuan, of which financial assets accounted for 90%. In 2014, Xingtai Holdings achieved operating income of 770 million yuan and net profit of 440 million yuan. Investment advice: According to our forecast of the financial data related to urban construction in Hefei in 2015, the real estate sector is estimated to be between 3 and 4 billion yuan. We are optimistic about the trade-offs between Hefei's state-owned enterprise reform and the company's future financial control transformation. The company's reasonable valuation is between 15.5 and 16.5 billion yuan. After deducting consideration for acquired assets, the reasonable range of the company's stock price is 28-31 yuan. Referring to the valuation levels of housing enterprises that have transformed financial control, such as Xinhu Zhongbao and Oceanwide Holdings, we gave Hefei Urban Construction a target price of 30 yuan, corresponding to 43 times the dynamic PE in 2015. First coverage, giving a “Highly Recommended” rating. Risk warning: Risks such as the risk of policy changes in the real estate market, macroeconomic performance falling short of expectations, falling short of expectations in Hefei's state-owned enterprise reform, and slow asset injection.