Main points of investment:

During the reporting period, the income increased significantly, the net profit lost, and the sales were good. In the first half of 16 years, the company realized operating income of 2.93 billion yuan, an increase of 940% over the same period last year, and realized the net profit belonging to the shareholders of the parent company-322 million yuan. The income exceeded expectations and the profit was lower than expected. During the reporting period, the company's revenue increased significantly due to the pre-sale of properties such as "Art Home" and "Liu Nan Village" in the current period. while the income increased greatly, the profit was negative, mainly due to the sharp decline in gross profit margin, the rise in financial expenses and the large amount of impairment loss of assets. during the reporting period, the company's gross profit margin was 14.19%, compared with 40.75% in the same period of 15 years, and the financial expenses increased by 273% due to the completion of the project. The amount of impairment loss on assets increased by 5122% over the same period last year. In the first half of 16 years, the company achieved a sales area of 240000 square meters, compared with 40, 000 square meters in the same period of 15 years, with sales of 1.6 billion yuan, an increase of 1.2 billion yuan over the first half of 15 years. Looking forward to the second half of the year, we believe that the company's sales will remain high. Sales for the whole year increased by a large margin. In the second half of the year, as the highly profitable projects enter the settlement cycle, the company's annual revenue will achieve high growth, and the annual profit level is expected to rebound significantly, coupled with the company's layout in tourism real estate, pension real estate and land development. we have confidence in the company's future.

The company's regional diversification is on the right track. In 15 years, the company achieved a foothold in Chongqing, the Chongqing project contributed income for the first time, Xi'an contributed income for the first time in the first half of 16 years, and Dali and Kunming were further consolidated. At present, the company's business has expanded to southwest central cities and first-tier cities such as Chengdu, Chongqing, Kunming, Xi'an and Beijing. It has basically realized the regional development strategy from "based on Kunming and layout of Yunnan" to "expanding to the southwest and the whole country with Yunnan as the center".

The company's existing land reserve is mainly in Yunnan, the first-level development project is expected to enhance the company's land reserve level. The company has a reserve planning construction area of 12.51 million square meters, most of which are in Yunnan, of which Kunming is the most. The company is engaged in the first-level land development and realizes the development income through the first-and second-level linkage. Based on the understanding of the development land, the company has a high probability of winning the corresponding land in the transaction of the secondary market. The first-level development project in hand is expected to provide sufficient land reserves for the company in the future.

Relying on the group resources, strengthen residential real estate, increase the size of tourism real estate, at the same time, the company has the concept of Yunnan state-owned enterprise reform. The group's rich resources can form a good synergy with the company's main business. at present, the company has formed a "Rongcheng" urban complex and a "Dream Yunnan" series of tourism real estate. "Yunhui guests" and "Dream Yunnan timeshare system" have greatly enhanced the added value of the company's products. The company has realized many layouts of tourism real estate through investment and M & A. the area has unique landscape, rich tourism resources, and has a very good development prospect. The company is a state-owned holding company, the current reform of Yunnan state-owned enterprises is in the forefront, the company is expected to take the lead to benefit from the reform dividend and broaden the growth space.

Profit forecast and investment rating: maintain profit forecast, target price: 5.6 yuan, maintain overweight rating. Optimistic about the coordination of the company's tourism real estate layout and shareholder group resources, we maintain the net profit of 300 million yuan, 390 million yuan and 470 million yuan belonging to the parent company in 16-18, corresponding to EPS:0.28 yuan, 0.36 yuan and 0.44 yuan. With reference to the comparable company's 2016 PE:20x, it gave PE:20x a share price of 5.60 yuan to maintain its overweight rating.