Core view: The decline in gross profit affects the scale of performance in 2016. The company achieved total operating income of 9.83 billion yuan, a year-on-year increase of 36.8%, and a year-on-year decrease of 1.9%. The increase in revenue was mainly due to an 81.6% increase in real estate settlement area. The main reason for the decline in industry performance was a decrease in gross margin. The settlement of the Changsha project with low gross profit accounted for more than 50%, and the profit margin of existing projects declined on average, while the rental business remained stable. Furthermore, the company's efforts to control expenses have reduced the impact of the decline in settlement gross margin. Sales increased dramatically, and the effect of strategic expansion was remarkable. The company achieved sales repayment of 22.6 billion yuan in 2016, an increase of 208% compared with the same period in 2015. It is the best performance in the company's history and the fastest growth rate. In 14/15, the company increased its land acquisition efforts. This strategy achieved immediate results and achieved rapid expansion in scale. The company currently has an advance payment of 18.4 billion yuan, which provides a good guarantee for performance growth in the next few years. Land investment remained high for 16 years, and the company continued to expand its real estate resource reserve scale, acquired a total of 14 parcels of land, and added about 3.7 million square meters of land reserves. The company has entered 11 cities, with a total of 30 projects proposed and under construction, with a total planned construction area of more than 15 million square meters. The expected results for 17 and 18 will be 0.22 and 0.24 yuan, respectively, maintaining a “buy” rating. The company's performance has declined, and structural changes in gross margin and settlement regions have contributed less to short-term profitability, but the sales scale has increased dramatically, and the ability to deliver results in the next few years is strong. Beichen has a large number of commercial real estate projects in Beijing, with a total reserve of 1.26 million square meters. Considering new projects in 2016, the NAV per share is 6.77 yuan/square meter. The risk suggests that sales performance is greatly affected by the regulatory policies of key cities, and there is uncertainty about the transformation of new businesses.