According to Frost & Sullivan's report, the size of the commercial decoration markets in Hong Kong and Macau will maintain compound annual growth rates of 8.2% and 13.1%, respectively, from 2015-2019. Furthermore, Ipsos expects the average price of renovation projects to maintain an upward trend in Hong Kong and Macau. Chengda Group (01568 HK, the “Company”) is a leader in the integrated interior decoration engineering industry in Hong Kong and Macau, specializing in providing professional interior decoration projects for residential properties and hotel projects. The company's business includes: 1) interior decoration; 2) renovation and construction; 3) manufacture, procurement and distribution of interior decoration materials. We expect revenue to increase from HK$4.133 billion in 2015 to HK$4.905 billion in 2018, or a compound annual growth rate of 5.9%. We expect gross margin to increase from 14.1% in 2015 to 18.2% in 2018. We expect net profit to grow from 382 million in 2015 to HK$631 million in 2018, or a compound annual growth rate of 18.3%. Earnings per share forecasts for 2016-2018 are HK$0.255, HK$0.264 and HK$0.293, respectively, or a compound annual growth of 4.9% in 2015-2018. We gave the company a target price of HK$5.00, corresponding to the expected price-earnings ratio of 19.6/18.9/17.1 times 2016/2017/2018. We gave the company a “collected” rating for the first time. The main risks are continued rising labor costs and falling short of expectations for new orders.