Event: the company announced its three-quarter report on the 29th that in the first-third quarter, the company realized operating income of 486 million yuan, an increase of 8.43% over the same period last year, and the net profit belonging to shareholders of listed companies was 27.413 million yuan, a decrease of 46.03% over the same period last year, with a basic EPS of 0.06.

The resources that can be sold are reduced, and the scale of sales is declining. The company's development projects in 2016 include Sihe Upper House (Beijing), Tianchuan (Yinchuan), Haiyu City (Tianjin) and Sunshine Harbor (Dalian). In the first-third quarter of 2016, the company achieved a total signed area of 22900 parties (- 28.66%), and the signed amount was 177 million (- 48.34%). Mainly due to the fact that sales have been largely contributed by the Yinchuan project since the beginning of the year, Tianjin and Dalian projects (Haiyu City opened on October 23) are about to open, which is expected to promote a rebound in sales in the fourth quarter.

The willingness to add new reserves is strong, and we should actively pay attention to Beijing-Tianjin and shed reform projects. At present, the company has yet to develop 502000 square meters of land reserve rights and interests, and 1.1 million square meters of settable reserve resources for the project in hand, mainly in Tianjin, Yinchuan and Dalian. In recent years, the company has put forward the strategy of "deeply ploughing Beijing and strategically focusing on Beijing, Tianjin and Hebei". In 15 years, it has stripped off the Inner Mongolia project and part of Tianjin Port land, withdrawing 340 million yuan in cash. At the same time, due to the lack of new project reserves for a long time, settling resources have declined sharply in recent years. Recently, the company has paid more attention to the urban area of Tianjin + the area around Beijing and the resource opportunities for shed reform led by the Beijing government, and it is expected that the willingness to invest in projects in the future will gradually increase.

Performance is still under pressure, but profitability is not weak, take a closer look at Yinchuan. The company's attributable net profit fell 46% in the first three quarters compared with the same period last year, mainly due to the high base of investment income in the previous period and the increase in income tax. The company's recent decline in reserves, but the profitability is not weak, the company reported project gross profit margin as high as 54.61% (year-on-year + 8.9 pct). Mainly because of the strong profitability of the company's Beijing Sihe upper house project, the gross profit margin was as high as 65% in the past. The offer is located in the second Ring Road of Beijing, the company took the land earlier, and the average sales price rose from 54000 / square meter at the beginning of the trading to more than 100000 / square meter at present. Although the company has no new project reserve this year, it has started and resumed 368700 square meters (+ 237%) of the project, of which the Tianjin project was suspended due to the big explosion last year, and about 110000 projects have been resumed so far this year. The amount of settlement that can be settled by the company has rebounded in the future, and even if the current scale of project investment is maintained (regardless of injection and land acquisition), there is still marginal room for improvement. According to the company's regional strategy, it is expected to supplement project resources in Beijing in the future.

The effect of national reform at the group level is outstanding, and asset carding and integration is expected to be accelerated: Jingneng Group, a major shareholder, was granted a free plan by Beijing SASAC at the end of 14 years, and its strength was greatly enhanced. Jintai Real Estate under the former Beijing Coal Group has nearly 1.8 million square meters of high-quality land reserves. in addition, the amount of land for self-use is not small after the relocation and closure of the group industry. In July 15, the company announced that Jingneng Group planned to inject its merged real estate assets into the listed company, but suspended the injection "due to the large amount of related assets" and "started the relevant work again when the conditions were ripe". This injection not only solves the problem of inter-industry competition, but also helps the group to further make good use of the listing platform, optimize the use of existing land resources, and achieve the purpose of maintaining and increasing the value of state-owned assets. According to the announcement, the company liquidated and cancelled some project companies in October this year. At present, after more than a year of combing and preparation, asset integration is expected to accelerate.

There is a breakthrough in financing bottleneck, which is conducive to the acceleration of project development. The company has relied more on trust and bank loans for financing in recent years, and the comprehensive financing cost of the company in 2015 was about 7.53%. In recent years, the company has gradually adopted a low-interest debt swap strategy, and has paid off the trust loan at the end of 15 years (the interest rate is as high as 9%). On April 7, the company successfully issued 800 million yuan, with the interest rate as low as 3.5%. During the reporting period, the company signed the Financial Services Framework Agreement with the Finance Company of Jingneng Group, while the subsidiary Ningxia Jingneng borrowed 5 billion (1 billion received) for the development of the third phase of the Yinchuan project. the interest rate is only the central bank benchmark interest rate (4% Mel 5%), which greatly reduces the cost of project development.

Investment suggestion: the current market capitalization of the company is about 4 billion, and by the end of the third quarter, the cash on hand has reached 1.29 billion yuan and NAV is about 3.17 billion yuan. In recent years, the scale of the company's project resources has decreased significantly, which has caused a certain drag on the company's performance. With the breakthrough of the financing bottleneck this year, the acceleration of asset integration of major shareholders and the increase of support, the company's future marginal improvement is expected. We expect the company's EPS to be 0.20,0.24,0.29 in 16-18, maintaining a "buy-A" rating and a six-month target price of 11.3 yuan.

Risk hint: performance continues to decline, settable resources can not maintain the current performance.