Key investment points: leading military enterprises, state-owned enterprise reform to advance the marketization process. The company is the only supplier of a full range of military products in China, focusing on military security products. Currently, it has a military supply market share of about 70%, a uniform market share of about 10% for unified clothing departments in 14 countries, including public security and courts, and stable military customers. The export ratio of some of the company's business in 2015 and the first half of 2016 was 4% and 4% respectively, which will benefit from the depreciation of the RMB. The State Assets Administration Commission is the actual controller. The company's marketization process is progressing in the context of state-owned enterprise reform. The market-based selection and recruitment of professional managers bill was reviewed and passed in September, and the operating efficiency is expected to improve. Promote transformation and upgrading, and build an international garden. The company focused on building the Jihuayuan project during the “13th Five-Year Plan” period. Through the introduction of an advanced 1+X business model, the company created a new lifestyle experiential consumer cluster centered on international fashion brand shopping, integrating fashion, sports and entertainment, tourism, vacation, leisure, and specialty catering, and developed large-scale commercial complexes and modern service formats. The company decided to raise an additional 4.4 billion yuan of capital, of which 4.1 billion yuan was invested in Chongqing, Changchun and other international garden construction projects, and 300 million yuan was invested in terminal market network construction. The plan was successfully completed at the end of July. We believe that the fixed increase project will provide the company with sufficient capital to ensure the smooth progress of the Jihuayuan project, thus leading a new consumption model and is expected to bring new profit growth points. Forward-looking layout for extreme sports, and further support for the Olympic program. The International Olympic Committee included competitive rock climbing and surfing in August, and will debut at the 2020 Tokyo Olympics. China plans to form a national surfing team to systematically prepare for the Olympics. In terms of rock climbing, it is also striving to become a rock climbing powerhouse. Chongqing Jihuayuan opened for trial operation in October. We believe that indoor surfing equipment may become a training ground for the National Sports Administration. At the same time, Jihuayuan can also host international and domestic related extreme sports events. The company forward-looking layout of high-end sports programs, takes advantage of sports growth, attracts traffic, and builds Jihuayuan in all aspects. Real estate reserves are abundant, and “leaving the city and entering the park” revitalizes land assets. Since listing, the company has increased a total of 9029 acres of land use rights due to expansion and project demand. According to the latest similar land supply bidding results in the Chinese land market, the company added about 7.334 billion yuan of land. From 2013 to 2016, the company had a total of 495,400 square meters of industrial land taken over by the government. As land prices have continued to increase in value in recent years, the company has received a total of 2,291 billion yuan in land asset disposal, with a net income of 1,956 billion yuan, a yield of 85.38%. As the government's “leaving the city and entering the park” policy continues to advance, the company's subsidiaries all have land that can enter the park out of the city, which will continue to bring the company opportunities for structural adjustment and industrial transformation and upgrading. Profit forecasting and valuation. The company's leading position in military products is stable and its business is relatively stable; real estate reserves are abundant, and entering the park out of the city brings profit from land price appreciation; investment in the international Huayuan industrial project is expected to generate new performance growth points; the 2016 non-public offering base price is 8.18 yuan/share (excluding dividends), and there is still a margin of safety. Considering the large upfront investment in the Jihuayuan project and the long payback period, additional projects will not be considered in the profit forecast for the time being. We expect operating income of 230.25 billion yuan in 2016/2017, net profit of 1,252/1,338 billion yuan, and EPS 0.32/0.35 yuan/share. The current price corresponds to 2016/2017 PE26/24x. Referring to relevant industry targets, we gave 2017 30 times dynamic PE, with a target price of 10.50 yuan, and a “buy” rating. Risk warning: Competition in military demand and civilian goods businesses has intensified, and the progress of the Jihuayuan project has fallen short of expectations.