The performance of Shanghai Real Holdings in 2016 is in line with expectations. Revenue reached HK $22132 million, up 12.4% from a year earlier. Net profit reached HK $2903 million, up 2.7 per cent from a year earlier. Earnings per share were HK $2.673, up 2.6 per cent from a year earlier. The dividend was HK $0.92, up 13.5% from a year earlier.

Main points: 1) the real estate business is picking up. The real estate business of Shanghai Real Estate Holdings has picked up. Shanghai City Development (00563 HK) and Shanghai Real Development (600748 SH) made net profits of 522 million Hong Kong dollars and 592 million yuan respectively, up 0.9 percent and 13.9 percent year-on-year. Contract sales of SSI are likely to reach HK $8 billion in 2016. 2) the company's new energy business is developing rapidly. The company currently has the installed capacity of 560MW in operation, and the sales of electricity is 557 million kWh, an increase of 65% over the same period last year. 3) the highway toll business and consumer goods business remain stable. The highway business contributed HK $2242 in revenue, up 0.9 per cent from a year earlier.

Maintain the target price at HK $25.00 and maintain the investment rating as' collected'. The listing of Shanghai Real Environment in Hong Kong is conducive to higher valuations. Our profit forecasts for 2017-2019 are HK $3.149, HK $2.959 and HK $3.284. The target price is 25.00 Hong Kong dollars, equivalent to 10.7 times the 2017 forecast price-to-earnings ratio and 0.7 times the 2017 forecast price-to-book ratio.