The 2016 results were 0.22 yuan per share, up 51.3% year on year. In line with expectations, Guancheng Chase announced 2016 results: operating income of 6.13 billion yuan, a year-on-year decrease of 17.2%; net profit attributable to the parent company was 320 million yuan, up 51.3% year on year, corresponding to earnings of 0.22 yuan per share, which is basically in line with expectations. Real estate settlement declined, but the share of equity increased, boosting performance: the company achieved operating income of 6.13 billion yuan during the period, a year-on-year decrease of 17.2%. Among them, real estate settlement revenue was 3.30 billion yuan, and settlement area was 331,000 square meters, down 28.3% and 4.8%, respectively. The main settlement projects during the period were Guancheng Datong Lanjun (139,000 square meters) and Baiwang Xinglin Bay (19,000 square meters). During the period, the company increased its holdings of holding subsidiaries Decheng Industrial and Decheng Land, which increased the share of settlement rights in the Beijing project (profit and loss attributable to minority shareholders fell sharply by 82.3% year on year), which in turn led to an increase in performance. In terms of gross margin, the real estate sector's gross margin before tax fell by about 5 percentage points year on year during the period, dragging down the company's comprehensive after-tax gross margin by 1.1 percentage points to 17.1% year on year. Sales increased slightly: The company's real estate sales area during the period was 348,000 square meters, up 12.7% year on year, achieving sales of 4.39 billion yuan, up 9.4% year on year. The main sales projects were Guancheng Datong Lanjun (150,000 square meters) and Baiwang Xinglin Bay (35,000 square meters). These two projects also accounted for 29% and 60% of the company's final advance account balance (3.25 billion yuan), respectively. The net debt ratio is at a low level in the industry: the company's cash at the end of the period was 4.04 billion yuan. The net debt ratio at the end of the period fell 9.7 percentage points to 6.8% from the beginning of the period, which is at a very low level in the industry. The future development trend will focus on the development of the new energy sector. In 2016, the company accelerated the pace of transformation of the new energy lithium battery industry. During this period, it completed plant purchases and R&D team formation. Some production lines have also been put into use and generated revenue (sales of 864 kilowatt-hours of power lithium batteries in 2016, revenue of 1.77 million yuan). Looking ahead, as the company's newly purchased production equipment is fully put into operation, the scale of lithium battery production will expand further in 2017, and it is expected to become a new profit point for the company in the future. Profit forecast We lowered the company's 2017 profit forecast by 11% to 0.32 yuan/share based on the latest project information disclosed by the company, and introduced a 2018 profit forecast of 0.41 yuan/share. Valuation and recommendations Currently, the company's stock price is 22.8 times and 17.9 times the 2017/18 P/E, respectively. Compared with the latest NAV discount of 12%, we continue to maintain the company's “neutral” rating and target price of 7.65 yuan, and the target price corresponding to 2017/18 P/E is 24.0 times and 18.8 times, respectively. Risk macroeconomic downside risk.