Incident: The company recently released its 2016 annual report. The company achieved operating income of 7.608 billion yuan, a year-on-year increase of 2.14%, and achieved net profit attributable to shareholders of listed companies of 741 million yuan, an increase of 1.48% over the previous year. Within the expected range of the company's performance, EPS was 0.32 yuan/share, a year-on-year decrease of 20%. Opinion: Both operating income and net profit have been rising steadily. During the reporting period, the company achieved operating income of 7.608 billion yuan, a year-on-year increase of 2.14%, and achieved net profit attributable to shareholders of listed companies of 741 million yuan, an increase of 1.48% year-on-year. EPS was 0.32 yuan/share, a year-on-year decrease of 20% (due to the 2016 allotment dilution). The steady increase in operating income and net profit is mainly due to the good progress of the company's development projects in various cities during the reporting period, and completed, ongoing and proposed projects are progressing according to plan. Affected by the low gross profit of some projects carried over, the overall gross margin decreased significantly during the reporting period. It is expected that as the market recovers in 2015, the gross profit margin of the sales projects will increase sharply, and the company's gross profit is expected to rise sharply this year and next two years. The business distribution is concentrated, mainly in Beijing, Tianjin, Xi'an, and Changsha. In 2016, the company achieved main business revenue of 7.59 billion yuan, an increase of 2.06% over the same period last year. Mainly due to the inventory removal policy, the company's main business rebounded steadily. The company is mainly located in Beijing, Tianjin, Xi'an, Changsha, Guangzhou and other cities. It is worth noting that at the end of the reporting period, the company purchased the Guangzhou Dayi Mountain Villa project through an equity acquisition, and Guangzhou became another new city the company entered. As of 2016, the company has settlement resources with a planned construction area of about 1,545,600 square meters. The company's sales contract amount in 2016 was 10.78 billion yuan, an increase of 129% over the previous year. The company's sales in 2016 exceeded 10 billion yuan, up 160.2% year on year. It successfully entered the 10 billion tier, with a sales area of 501,000 square meters, an increase of 84.9% over the previous year. The sharp increase in contract amounts has laid the foundation for the company's rapid growth in performance over the next 2-3 years. The cost reduction effect is remarkable by opening up financing channels. During the reporting period, the company raised a total of about 6 billion yuan in capital through issuing corporate bonds, allocating shares to all shareholders, and issuing private equity REITs. The company has maintained good cooperative relationships with many financial institutions. Under the premise of maintaining the original financing channels, the company has actively tried new financing methods, obtained sufficient capital for the company, and strongly supported the company's long-term development and stable operation. Pay attention to talent reserves and implement equity incentive plans. The company has been exploring and implementing continuous equity incentive plans, deeply binding the core management team and key professionals to the company's interests, further attracting, motivating and retaining core talents, ensuring the long-term stability of the company's management core and professional core, and ensuring the long-term, stable and healthy development of the company's business. At the end of 2015, the company's equity incentive plan was approved by the State-owned Assets Supervision and Administration Committee of the Xicheng District People's Government of Beijing. The total number of company shares covered by the plan is 15.69 million shares, accounting for 0.863% of the company's total share capital. Incentives are awarded to the company's directors, senior management and other core management and technical leaders. The total number of incentive recipients was 44, accounting for 9.8% of the company's total number of employees. The plan is valid for seven years from the date of grant and cannot be exercised for 24 months from the date of grant. When the conditions for entry into force are met, the stock options granted to the incentive target are effective in four batches, and the employee's personal performance determines the number of stock options that can actually be applied. The company will not separately initiate another equity incentive plan for 24 months from the date of grant. On May 11, 2016, the company reviewed and passed the “Proposal on Granting Stock Options to Equity Incentive Recipients”. The equity incentive recipients were adjusted from 44 to 39, the total number of stock options granted was adjusted from 15.69 million to 1.57 million, and the exercise price of the stock options was 7.43 yuan. Considering that the first batch of stock options granted by the company expires next year, judging from the current point of view, the company's stock price still has huge room to rise. Profitability is comparable to industry leaders. We believe that although it is difficult for the company to match the leading companies in the industry in terms of scale, its profitability has remained at a high level in the industry. Judging from the specific data of the cash dividend ratio since listing, the company has maintained a relatively high dividend ratio since starting cash dividends in 2008; from weighted ROE trend analysis, it has also basically maintained the same pattern as Vanke and Poly, thus using facts to prove its strong profitability. Risk warning: project development risks, sales uncertainty, further tightening of industry policies