Matters: Company announcement: It plans to invest 283 million yuan to acquire 500 million shares of Shenzhen Tongxin Investment Fund Co., Ltd. (Tongxin Fund for short) held by 16 companies including Yard Investment Advisors, accounting for 17% of its total share capital. Comment: Joining the Shenzhen Small Loan Central Bank and building links between people and wealth, making an important layout for building a comprehensive commercial real estate service ecosystem, Tongxin Fund was founded in 2013, has a registered capital of 2.9 billion yuan, and currently has 58 shareholders. It is a group of well-known business people with economic strength, social influence, and political standing in Shenzhen and Hong Kong, such as Ma Huateng, Chairman of Hong Kong Cheung Kei Group, and Zhang Simin, Chairman of Hong Kong Cheung Kei Group, and Zhang Simin, Chairman of Haiwang Pharmaceutical. The company announced an investment of 283 million yuan to acquire 500 million shares of Tongxin Fund, becoming the largest shareholder. Currently, the main core business of Tongxin Fund is refinancing and internet finance business. Judging from the core business model, we believe that the role played by Tongxin Fund is equivalent to that of the central bank of a small loan company. It is responsible for financing the small loan industry and transfusing blood into the real economy and the small and micro economy in Shenzhen. Licenses are scarce to a certain extent, and business barriers are high! At the same time, Tongxin Fund is also committed to providing a full range of financial services in the fields of equity investment, mergers and acquisitions, financing guarantees, internet finance, investment and financing consulting, etc., in order to create the country's most unique financial holding platform serving the development of the private economy. Based on net assets in November 2015, the 17% equity value of Tongxin Fund is 273 million yuan, which is basically the same as the company's purchase price of 283 million yuan, but considering the profitable growth of the acquisition of Tongxin Fund, the scarcity of business (it has a reloan license for the first small reloan company in Shenzhen), and the synergy of partners (Guangdong Yueke Financial Group is a wholly state-owned enterprise authorized by the Guangdong government, and one of the two major financial holding platforms of the Guangdong government), compatibility with the company's development (integrated use of Tongxin Fund in fund management, microfinance, P2P, venture capital, etc.) In terms of resources, which accelerate the company's layout in the financial sector) and good social effects (the core shareholders are well-known people from both Shenzhen and Hong Kong), etc., the company's gains can be described as exceptional value. In the 2015 three-quarter report, the company proposed that in the field of “commercial and office real estate services”, it will achieve rapid replication and expansion with a “asset-light operation model”, create a comprehensive real estate service ecosystem, and provide comprehensive real estate and financial services to owners and business customers. We believe that becoming the largest shareholder of Tongxin Fund means that the company has begun to build links between people and wealth. This is an important layout for building a comprehensive commercial real estate service ecosystem. Integrated mergers and acquisitions, continuous actions. In September 2015, the company announced that it is actively exploring business transformation. In the future, it will focus on transforming and developing business into related industries such as high-end consumer services and financial services, mainly guided by an asset-light model, and building a business system for high-end business travel services, real estate management services, and financial value-added services. At the same time, a number of companies such as Huangting Online, Huangting Fund, Huangting Real Estate, and Shenzhen International Business Expo were set up. Through the announcement statement and research on the business scope of the newly established company, we believe that many of the company's newly established subsidiaries revolve around a core goal, and that a prototype of its strategy to build a comprehensive real estate service ecosystem has officially surfaced. Through the collaborative efforts of the above four subsidiaries, rapid replication and expansion have been achieved, providing real estate value-added, entrepreneurial finance, and high-end business travel services to commercial real estate service clients (owners, tenants). Please refer to the following chart for the business structure and related company functions: At the same time, the company transferred 100% of its shares in Guoshang Forestry. The divestment of forestry assets is in line with the above strategic focus, and the return of cash (11.76 million yuan in equity consideration, 80.37 million yuan in debt recovery) has provided financial support for the transformation. On January 16, 2016, the company issued a series of announcements - 1. The company's subsidiaries signed contracts with other companies under the group to provide property services to the Huanggang Business Center in Shenzhen (with the exception of Huangting V Hotel) and Gangxia Huangting Tower. This move will help the company expand real estate management service business, and is expected to increase the company's operating income and enhance overall competitiveness; 2. The company's subsidiary plans to invest in the establishment of a joint venture with Beijing Wangfujing Shopping Center Management Co., Ltd. (51% of Huangting). The joint venture will further implement the company's real estate development (commercial real estate management) Service strategy, integrating the resources of both partners in terms of commercial customers, brands, talents, management experience, etc., to accelerate the development of the company in the commercial shopping center operation and management industry, and at the same time turn the Huangting Plaza Shopping Center into a benchmark shopping center leading Shenzhen and the whole country; 3. The company's subsidiary plans to invest in a joint venture with Beijing Shengli Commercial Investment Management Co., Ltd. to establish a joint venture with Beijing Shengli Commercial Investment Management Co., Ltd. (66.5%). The joint venture mainly invests in content investment in commercial operations, focusing on children's themes, entertainment themes, fashion, lifestyle and related content, etc. The commercial management project for operation management services provides experiential, interactive and participatory commercial business content support, and is committed to building a commercial investment platform combining commercial operation and content investment; 4. The company and subsidiary Royal Palace Fund and Beijing Ruixin Investment Management Co., Ltd. plan to establish a special merger and acquisition fund for Huangting to carry out industrial integration in the commercial real estate industry, with a total scale of 1 billion yuan (the company's investment scale is not less than 300 million yuan). It will mainly focus on Huangting's industrial integration ideas, invest and expand domestic and foreign commercial real estate and other related industrial projects, using Royal Court's operational capabilities in commercial operations With experience, we will increase the value of investment targets, and at the same time make full use of the partner's resources and experience in commercial real estate mergers and acquisitions to assist in carrying out industrial integration, rationally reduce the risks that may exist for listed companies due to mergers and acquisitions, and accelerate the pace of development and integration. We analyzed the above announcement: Action 1 means that the Group's high-quality resources will be further skewed towards listed companies, and in the future, the Group's resources and experience advantages may be further released to the outside world through listed companies. At the same time, this move will also directly increase the company's revenue scale and profitability; the establishment of a joint venture between 2 and 3 has enhanced the company's commercial real estate operation capacity; 4. The establishment of a commercial real estate fund in China will improve capital operation efficiency, and the company's resources and experience in improving the efficiency of commercial real estate stocks will be replicated and expanded externally through this fund. The employee stock ownership plan has 2 times leverage and is relatively expensive. The chairman underscores the bottom, fully demonstrating the company's confidence in the future. In the second half of 2015, the company launched a large-scale employee stock ownership plan to bind interests and work together. The total size of 200 million yuan, double leverage, directors and supervisors of listed companies and extensive participation of core employees/groups and subsidiaries within the group system, and Chairman Zheng Kanghao generously escorted the shareholding plan, demonstrating the determination and will of the company and even all members of the group to stay in the same boat and grow and develop together with the company, providing guarantees for the company in terms of talent retention, long-term and short-term interest adjustments, etc., and also sent a positive signal to the capital market! At present, the purchase of the listed company has been completed, and the average cost price is 26.71 yuan; the group has also completed the purchase, but the exact cost has not been announced. It is worth noting that the shareholding scale of 200 million yuan has a huge effect on stabilizing a company with a small tradable share capital (currently circulating A shares with a market value of 3.8 billion), such as Huangting International; yet this is only the first phase of the employee stock ownership plan. According to the “Employee Stock Ownership Plan (Draft)” announced by the company, the upper limit of employee shareholding is 10% of the total share capital. n The prototype of “big asset management” has been formed, maintaining the “buy” rating. We believe that through a series of integration and mergers and acquisitions since the fourth quarter of last year, the company has initially completed construction in the large asset management business field. In the future, it is hoped to build a closed loop connecting people and wealth in the commercial real estate segment, and expand the value-added efficiency of the stock of commercial real estate, non-performing asset management (commercial real estate segmentation), and investment and financing business for owners and entrepreneurs. Big asset management is a big opportunity for China in the future. We are optimistic about the company's future growth in this field. We expect that its performance in the next four years may grow exponentially: 2015-2018 net profit was 50 million yuan/250 million yuan/450 million yuan/900 million yuan, respectively, with a compound annual growth rate of 162%. The estimated EPS for 16-18 is 0.44/0.78/1.57 yuan, and the corresponding PE is 60.8/33.8/16.9X, maintaining the buying rating.