Core view: Property disposal increases profits, and it will take time for the main business to reverse losses. Hualian Co., Ltd. released its semi-annual report. H16 had revenue of 525 million yuan, down 17.5% from the previous year; imputed net profit of 46 million yuan, up 29% from the previous year, of which investment income was 293 million yuan; net loss after deduction of 118 million yuan, slightly higher than the non-net loss of 109 million yuan in the same period last year. 1) The core profit model of the company's main shopping and operation business is to build/buy properties, sell return capital after operation is mature, and continue to operate the property as the operator (leased properties are the difference between the company's rent and the merchant's rent), so they have to bear losses during the cultivation period; 2) The decline in 1H16 revenue was mainly due to project disposal (5 in 15+ 2 in the first half of the year), and investment income was also mainly due to disposal profits; 3) Considering that most of the disposal projects are mature projects, losses after deduction have not increased significantly over the same period, indicating that losses are still within the scope of management+; however, losses are still within the scope of management+; Expenses increased 21.3% year over year to 223 million yuan reflects that in an environment where offline consumption is generally sluggish, there is a lot of pressure on the company to train new projects (a net increase of 13 projects in 15 years), and it will take time for the main shopping center business to reverse losses. The general logic of transformation is clear, and it is yet to be determined that growth and implementation will proceed. The company's general logic is very clear, that is, property dispose of return capital, introduce a fixed increase in CITIC Industrial Fund (holding 18.4% of shares after completion, becoming the company's second largest shareholder), connect with investment and incubation in high-quality consumer projects under the Industrial Fund, and transform shopping center operations and equity investment into a two-wheel drive. In addition to the Hungry? (90 million US dollars) and Song Bar (160 million yuan) projects, which were invested in the first half of the year, the company completed investment in projects such as World Residences (230 million yuan) and Changping Longde Plaza (115 million yuan), while also completing investment in asset management subsidiaries Hualian Hairong (Hengqin) (500 million yuan) and Shenzhen Chishan (100 million yuan). The company's fixed increase meeting has not yet passed (the first round of feedback was completed in early July), and is currently actively cooperating to promote the completion of the fixed increase project. Considering subsequent property disposal and equity investment income and loss reduction in the main shopping center business, the impact of fixed increases is not considered yet. The EPS for 16-18 is expected to be 0.15/0.20/0.26 yuan respectively, maintaining the “buy” rating l Risk warning: the fixed increase did not pass; the investment process fell short of expectations; and offline consumption continued to be sluggish