Events: The company announced its 2016 annual report and 2017 quarterly report: 1) In 2016, the company achieved operating income of 2,094 billion yuan, an increase of 88.26%; realized net profit attributable to shareholders of listed companies of 11.8673 million yuan, a year-on-year decrease of 58.25%; 2) in the first quarter of '17, the company achieved operating income of 204 million yuan, a year-on-year increase of 24.62%; net profit attributable to shareholders of listed companies was -24.5 million yuan, a year-on-year decrease of 335%. Operating income has doubled, and profitability needs to be improved: 1) Revenue continues to rise, and net profit is declining year by year: The decline in net profit in '16 was mainly due to a large year-on-year increase in period expenses due to the expansion of sales, etc., and the decline in net profit in the first quarter of '17 was mainly due to changes in the settlement structure. 2) Gross profit margin, net profit margin and ROE continued to decline: The company's 16-year gross margin was 21.81%, net profit margin was 1.24%, and ROE was 0.75%. In the past three years, the company's gross profit margin, net profit margin and ROE have continued to decline, and the company's profitability needs to be improved. 3) The balance ratio rose, and net cash flow from operating activities was negative for 4 consecutive years: up to the end of the first quarter of '17, the company's balance ratio was 88.7%, and the real balance ratio was 85.29%, rising year by year, and the capital structure was under pressure; net cash flow from operating activities was negative for 4 consecutive years, yet monetary capital was 4 billion dollars at the end of the first quarter, far higher than the sum of short-term loans and non-current liabilities maturing within one year of 4.7 billion yuan. Ample capital, and the level of cash security for short-term debt repayment was still high. The sales scale is growing at a high rate, and the Suzhou project contributed nearly half of the revenue: 1) Benefiting from the layout of urban real estate, the sales area and sales amount increased rapidly year-on-year: the company signed sales volume of 5.17 billion yuan in 2016 and completed project investment of 7.7 billion yuan, all exceeding the plan at the beginning of the year; in the first quarter of '17, it achieved a contracted sales area of 93,000 square meters, an increase of 31% over the previous year, and the contract sales amount was 1,235.07 million yuan, up 49% year on year. The company's sales area and sales amount continue to grow, mainly due to the project layout and elimination of the urban real estate market. The company's products focus on the benefits of newly needed and improved housing products, and the sales results are impressive. 2) Suzhou and Changsha are the main revenue projects, and brand influence has increased: The company's real estate development project layout focuses on key second-tier cities with more developed economies. In 2016, projects developed by the company in Suzhou, Tianjin, Changsha, and Chongqing had excellent results in elimination in the regions where they are located. In 2016, the East China region contributed 49% of the company's revenue, and the central China region contributed 30% of the revenue. The company's deep cultivation in urban layout has shown results. Custody of CCCC Real Estate, asset consolidation expectations remain: 1) Custody of CCCC Real Estate, with annual revenue of 4 million: CCCC Group has three real estate platforms, including CCCC Real Estate, CCCC Real Estate, and Greentown China. In order to minimize and avoid competition among peers, CCCC Real Estate Group signed a “Custody Agreement” on April 21, 2017. The “Custody Agreement” was signed on April 21, 2017. The annual escrow fee is 4 million yuan. The trusteeship period is tentatively scheduled for three years. We judge that the escrow business is a temporary measure to resolve competition among peers. The amount of additional revenue added to the company every year is small, which is a transitional measure before asset restructuring. 2) Asset consolidation expectations remain: The company's asset restructuring ended in June '16 due to a veto by bondholders in '16. We believe that until the matter of terminating the restructuring is resolved, CCCC Real Estate may inject the whole thing into the company, and there are still expectations for future integration. As of the end of September 2016, CCCC Real Estate had total assets of 23.77 billion yuan and net assets of 7.1 billion yuan; operating income for the first three quarters of 2016 was 2.29 billion yuan. The integration of CCCC Real Estate will expand the company's project resources, complement each other's advantages, and bring the company's real estate business to the next level. Investment suggestions: The company's sales scale has expanded and brand influence has increased; competition issues with CCCC Real Estate have adopted custodial transitional measures, and future asset integration is expected to expand the company's project resources; in '17, we expect the company to increase its expansion and sales efforts. Contract sales are expected to reach 10 billion yuan, and the company's operating income is expected to reach 3.5 billion yuan in 2017. Gross margin is expected to increase in 2017, and revenue and profit are expected to double increase. We expect the company's EPS in 17-19 to be 0.24, 0.32, and 0.35, respectively, and the PE multiples corresponding to the current stock price are 105.2X, 77X, and 70.4X; we maintain a “buy-A” rating, with a target price of 29.72 yuan for six months. Risk warning: Performance falls short of expectations, and long-term revenue growth in the real estate business has not increased profits.