Continued high revenue growth, a decline in the structural impact of gross margin settlement projects, and financial and income tax charges drag on performance. According to the company's third-quarter financial report, 163Q achieved a total operating income of 4.43 billion yuan, an increase of 51.8% over the same period last year, and a net profit of 170 million yuan, an increase of 2.6% over the same period last year. The low growth of net profit is mainly affected by substantial increases in financial expenses and income tax expenses that cannot be capitalized. During the reporting period, the gross profit margin was 24.6%, and in the same period of 15 years, the gross profit margin was 30.0%, a decrease of nearly 5 percentage points. the decline in gross profit margin is mainly due to the fact that most of the settlement income during the reporting period came from third-and fourth-tier cities, and the decline in the level of market gross profit margin was widespread. The company increased its sales strategy of removing inventory and withdrawing funds, and both market and company factors led to a decline in settlement gross margin during the reporting period. However, compared with the semi-annual gross profit margin of 22.9%, the company's fundamentals have shown signs of improvement, and we expect the company's profitability to improve in the future as more profitable projects enter the settlement period.

Benefiting from the heat of the market, the sales momentum of goods value during the reporting period was strong, with sufficient resources on hand, of which first-tier cities accounted for a new high of 15.04% in terms of salable area. During the reporting period, the company achieved a sales area of 1.103 million square meters, sales of 11.52 billion yuan, an increase of 42.2% and 58.7% over the same period last year, and the average sales price rose slightly from 9360 yuan / square meter in the same period of 15 years to 10448 yuan / square meter. The company has strengthened the layout of first-and second-tier cities in the second half of last year. Decisive, the current reserve construction area of 4.3 million square meters, first-tier cities accounted for 15.04%, second-tier cities accounted for 41% The first and second lines account for about 56% of the total, and the company's regional transformation is advancing in an orderly manner. Overall, the company's current project reserve structure is more optimized than in the past, and reasonable regional distribution ensures the continuity of the company's future sales.

The company takes the road of financial real estate and waits for a breakthrough in cooperation with the group. The main business of the group is the disposal of non-performing assets, the scale of housing-related assets is large, and the company is the only listed real estate enterprise of the group. The follow-up processing of housing-related assets requires the professional ability of the company, so it occupies a key part of the strategic layout of the group. At present, the company is also actively promoting the financial real estate model of cooperation with the group, giving full play to the advantages of the group in many aspects, such as capital, land and projects. in the future, the company's income structure will also change from the current project development to a diversified structure of project development, investment income and professional services, which will effectively reduce the company's operational risk.

Investment rating and valuation: maintain profit forecast and maintain overweight rating. The company has strengthened the layout of first-and second-tier cities in the second half of 15 years, and the land reserve structure has become more reasonable. we are optimistic about the layout of first-and second-tier cities and the landing of the synergy between the company and the group, so as to maintain the company's profit forecast for the next three years. The estimated operating income for 16-18 years is: 104.1 shock 119.4 / 13.58 billion yuan, 16-18 year net profit: 8.9max 10.2 / 1.11 billion yuan. The corresponding year-on-year growth rate is 3.9%, 14.4%, 8.2%. In 16-18, the EPS is estimated to be 0.59, 0.67, 0.73 yuan, and the current share price is 7.22 yuan, corresponding to the PE:12.24X/10.78X/9.89X in the next three years.