Incident: The performance forecast for the first quarter of 2017 was reduced by 80%, and the company issued a quarterly report reduction notice. The net profit for the first quarter of 2017 is expected to drop 80% from 229 million yuan in the same period last year, and net profit after deducting non-net profit of 4.27 million yuan in the same period last year to a profit of about 27 million yuan. Non-recurring profit and loss caused a sharp decline in profit. Subsequent subsidies are expected to continue in the same period in 2016. The non-recurring revenue of 3.1 million yuan confirmed by China Material Storage and Transportation Tianjin Co., Ltd., a wholly-owned subsidiary of the company, on part of the land owned and confirmed was the main reason for the sharp year-on-year decline in the company's profit in the first quarter. In recent years, compensation income from the company's urban land deposit has become its main source of profit. In 2015/16, compensation payments reached 953/1,013 billion yuan respectively. In 2017, according to currently known demolition projects, land compensation is expected to reach around 600 million yuan, and it is likely that the storage and subsidy model will continue in the future, so subsidy income is expected to remain at the average level of recent years. Although the strategic transformation process has been slow, the traditional main business has gradually picked up, and the company's net profit after deduction has turned a loss into a profit this quarter. On the one hand, due to the recovery in supply and demand for traditional downstream commodities, driven by rising prices, warehousing and warehousing and warehousing operations have maintained a significant recovery. On the other hand, the company continues to quickly manage loss-making enterprises and actively expand the supply chain business for living materials, which is expected to provide stable support for the company's main business revenue and profit growth. In recent years, the company is in a period of strategic transformation. Investment in new projects is high, and market development still requires time. In particular, the strategic cooperation project with Prologis has not yet been implemented. Although profit improvement cannot be achieved in the short term, the direction of transformation is in line with market needs, and there is room for long-term imagination and the ability to improve profits. Subsidies continue, maintain the “increase in holdings” rating, and the company's land replacement model is expected to continue in the future, and improvements in main business operations will be sustainable as traditional downstream markets recover and new projects are implemented. Chengtong Group, where the company is located, is a pilot enterprise for central enterprise reform. The reform of state-owned enterprises in 2017 is quite certain, and the direction of China Reserve reform is quite clear. After streamlining the management system, it is expected that business vitality will continue to unleash, freeing up profits from scarce resources. The 2017-2019 EPS is expected to be 0.38/0.42/0.44 yuan, respectively, maintaining the target price of 10-11 yuan and the “increase in holdings” rating. Risk warning: The progress of the company's reforms has been significantly slower than expected, and the internal business goals are unclear. The overheating of logistics real estate has caused a sharp decline in rental income.