Key investment points: The company's interim performance fell short of expectations, and net profit was lower than the same period last year. The company's operating income for the first half of 2016 was $3.51 billion, up 65.5% year on year; net profit was 260 million dollars, down 3.56% year on year, mainly due to the increase in investment income of 210 million compared to the same period last year, and second, the increase in operating profit and reduction in investment income, which led to an increase in income tax expenses of 230 million over the same period last year. Operating cash flow was $1.12 billion, up 566% year on year, mainly due to an increase in sales payback compared to the same period last year. The settlement area of the real estate business was high, 49% of the full year of last year, and the sales area was lower than the same period last year. The company's project settlement for the first half of 2016 was 283,000 square meters, with a settlement amount of 3.14 billion yuan and an average settlement price of 1,063 yuan, down 19 percentage points from the average settlement price in 2015; the project sales area for the first half of the year was 1510,000 square meters, down from the same period last year. The unsettled sales area of major projects in the same period last year was 155,000 square meters. The company's overall gross margin rose against the market, reaching 31.59%, 9.5 percentage points higher than at the end of 2015 and 11.6 percentage points higher than the same period last year. The gross margin of the real estate business in the first half of the year was 30.65%, an increase of 10.1 percentage points over the same period last year; due to the increase in the market price of the company's real estate projects, asset impairment losses in the first half of 2016 returned to 9.52 million yuan. Inventory removal has accelerated, and the pace of land acquisition has slowed down. The share of completed development products in the first half of 2016 in the inventory of net inventory was 27.3%, down 10.9 percentage points from the end of 2015, but still higher than 8.5 percentage points in the same period last year. In the first half of 2016, the company added a new cooperative development project in Lingang, Shanghai, with an equity ratio of 51%, covering an area of 33,000 square meters. The company's latest land reserve data is 2,573 million square meters (as of 2016 Q1). Overall, the removal of the company's inventory has accelerated, and the land acquisition progress is lower than expected. We expect the company's real estate business to shrink in the future. The business progress of the proposed acquisition of ARC Group fell short of expectations. As of September 1, the company was unable to hold a board of directors to review major asset restructuring proposals and other related matters. At present, the on-site audit work for this transaction has been completed, and the on-site evaluation work is nearing completion. Due to non-recurrent matters in the production and operation of ARC Group, the progress of this major asset restructuring has been affected. The uncertainty about whether it will be reviewed and approved by the shareholders' meeting, review and approval by the China Securities Regulatory Commission's M&A and Reorganization Committee, approval by the China Securities Regulatory Commission, and the timing of final approval or approval has increased. Maintaining a neutral rating, the target price is 9.39 yuan. We expect the company's 2016-2018 EPS to be 0.24/0.27/0.39 yuan respectively. Since the company's sales progress and land acquisition progress were lower than expected, we lowered the company's 2016-2018 EPS from the previous valuation by 0.03/0.14/0.07 yuan, respectively. Taking into account the company's real estate business and profit growth potential after the acquisition of ARC, and the incentive effect of the employee stock ownership plan, we gave the company a PE valuation of 39.1X in 2016, corresponding to the target price of 9.39 yuan. Specifically, we used a segmented total valuation method to estimate the value of the company, split the company's business into the real estate business and the auto parts business, and assume that the company's cash balance at the end of each year is used to reinvest in the real estate business. Under the RNAV valuation method, we reinvest part of the company's real estate business and remaining cash balance at the end of the period with a target price of 6.09 yuan/share. Under the PE valuation method, we gave the auto parts business a valuation of 3.30 yuan/share.