The company's 2016 revenue was 10.485 billion yuan, up 30.1% year on year; net profit was 580 million yuan, up 23.9% year on year; EPS was 0.61 yuan/share, not in line with previous expectations of 0.62 yuan/share. Key investment points: Cost control continues to improve, and the net debt ratio has declined sharply. The consolidated gross profit margin for 2016 was 24.9%, down 2.5 percentage points from the previous year, mainly due to the fact that the gross margin of Jiangbei Real Estate, which is a high-weight settlement project, was only 23.3%; the net profit margin was 5.5%, down 0.3 percentage points from the previous year. The three-fee rate fell to 7.1% for three consecutive years, down 4.1 percentage points from the previous year; the net debt ratio fell 24 percentage points to 73% from the beginning of the year; pre-collected accounts were about 8.23 billion yuan, locking in 80% of the performance in 2017; and sufficient capital, with on-hand capital reaching 10.18 billion yuan. There is a big difference between the average sales price of the real estate business and the average settlement price. Profitability is expected to improve markedly after entering the settlement period 1-3 years. The company has a settlement area of 1.23 million square meters (+31.2%); settlement revenue of 9.17 billion yuan (+38.7%), average settlement price of 6947 yuan/square meter (+5.8%); sales area of 1,080,000 square meters (+4.1%); sales amount of 11.29 billion yuan (+33.2%), average sales price of 10,443 yuan/square meter (+27.9%). It is expected that after the 16-year sales project enters the settlement period, the gross margin of the real estate business will increase significantly. The company's sales revenue is expected to reach 13.55 billion yuan in 2017, an increase of 15%-20% over the same period last year. By the end of '16, the company had 2.32 million square meters of land to be developed (-12.5%) in Wuhan and other cities in Hubei, 7.15 million square meters of land to be developed (-6.8%), sales stock of about 640,000 square meters (-32.6%), and owned properties of about 155,000 square meters (+6.1%). In 2016, 618,300 square meters of construction were started, with a completed area of 1,319,700 square meters. The company expects a new construction of 1.5 million square meters in '17 (+142.6%). The volume of goods is sufficient, and sales are expected to reach another level. The plan to increase holdings is progressing smoothly, providing a safety cushion for stock prices. Based on confidence in the company's future development, the parent company, Fuxing Group, plans to increase its holdings of the company's shares by about 47 million shares through methods permitted by the Shenzhen Stock Exchange within eight months from October 24, 2016, accounting for 4.95% of the current share capital. From October 28 to December 30, 2016, the parent company increased its holdings by 33.394 million shares, accounting for 3.52% of the share capital, and the average price of the increase was 12.38 yuan/share; after the increase, the parent company accounted for 23.04% of the shares, and promised not to reduce its holdings for six months from the date of completion of the holdings increase plan. As the first tier of second-tier cities, Wuhan will continue to benefit from the spillover of first-tier demand, good regional center development prospects, and strong population agglomeration capacity. As a leader in Wuhan, with its rich and ultra-low-cost land reserves, the company has outstanding future development value and a great competitive advantage. Currently, the company's RNAV22.3 yuan/share, with an average shareholding price of 12.38 yuan/share, providing a high margin of safety. The estimated operating income for 17-19 is 114, 128.9 billion yuan, corresponding to growth rates of 8%, 12%, 9%, and a three-year compound growth rate of 10%; the 17-19 EPS is 0.84, 1.00, and 1.14 yuan, with a three-year compound growth rate of 23%, corresponding to PE16, 13, 12 times, and the target price for 6-12 months is 15.8 yuan, corresponding to 17 times PE 19 times, maintaining the “recommended” rating. Risk warning: Policy regulation brings market fluctuations, smart community promotion falls short of expectations, metal products business losses, etc.