Events:

The company announced its annual report summary on August 25. During the reporting period, the company realized operating income of 1.367 billion yuan, an increase of 117.17% over the same period last year. It turned losses into profits and realized a net profit of 40 million yuan belonging to the owner of the parent company, compared with a loss of 119 million yuan in the same period last year, an increase of 133.19% year-on-year and a weighted average return on net assets of 1.99%.

Viewpoint:

The project in Beijing continues to release its performance and turn losses into wins. During the reporting period, the company realized operating income of 1.367 billion yuan, an increase of 117.17% over the same period last year, and the income of real estate sales carried forward from operating income was 1.283 billion yuan. the year-on-year increase was 149.96%. The gross profit of the company's real estate sales business in the first half of 2016 was 25.22%, an increase of 8.84% over 16.38% in the same period last year. The operating profit was 138 million yuan, compared with a loss of 92 million yuan in the same period last year, and the net profit attributed to the owner of the parent company was 40 million yuan, compared with a loss of 119 million yuan in the same period last year, an increase of 133.19% over the same period last year.

The main real estate business achieved contracted sales area of 78000 square meters in the first half of the year, an increase of 1.43% over the same period last year; contracted sales of 3.731 billion yuan, an increase of 35.28% over the same period last year; the company's project stock in Beijing was released, and the company's main business grew continuously year by year.? Broaden financing channels and further reduce financing costs. Since 2015, the company has expanded its financing channels in many directions, issuing a total of 2.779 billion yuan of corporate bonds since 2015, of which 2 billion private corporate bonds have been issued since the beginning of 2016 with low financing interest rates to repay loans with higher interest rates. makes the company's cost of capital further reduced. Judging from the two non-public offerings in 2016, the financing is relatively smooth and the financing cost is low. under the relatively relaxed capital environment in the current market, it is very likely that the company will continue to issue bonds to provide cash for the company's development through capital market channels in the future. At the same time, with the adequate credit lines of financial institutions, the short-term financial pressure of the company has also been alleviated.

At the end of the reporting period, the financing balance of the company was 16.45 billion yuan, and the weighted average financing cost was 8.63%, which was 0.72% lower than the 9.35% at the end of 2015, or 7.7%. Among them, the financing balance of real estate business is 16.04 billion yuan, and the lowest project financing cost is 5.71%. The highest project financing cost is 10.05%? The strategic landing of the return to Beijing has obvious competitive advantages. The company's strategic layout of "taking Beijing as the center and relying on rail transit" has now entered a stage of deep implementation. From the revenue of the main business in 2015 and during the reporting period, the strategic goal of taking Beijing as the center has been basically achieved.

During the reporting period, the total revenue in Beijing accounted for 90.56%, of which track property projects accounted for 81.04%. Among the company's real estate project inventory, the inventory in Beijing area reached 21.2945093 billion yuan, accounting for 95.27% of the total inventory of various projects. mainly track property projects, Honolulu projects, Pinggu projects.

The company is the pioneer of property development above rail transit in China, and has achieved innovative breakthroughs in shock and noise reduction, construction of structures, new materials and other technologies.

In the start-up cycle, operational safety and other aspects of the industry-leading, known as Asia's leading "third-generation rail property". Relying on the upstream advantage of the controlling shareholder Beijing Investment Group in the development of properties built on the track, and by specializing in the subdivision of properties built above the rail transit and the resources and financial support of the controlling shareholders, the company has a differentiated competitive advantage in the Beijing market. at the same time, most of the company's projects in Beijing cooperate with industry leading enterprises to develop, which reduces the development risk to a certain extent. It is also helpful for the company to learn the project management and operation experience of the leading enterprises in the industry.

Major shareholders to enhance the control of resources are expected to further tilt. After a series of equity adjustments, the company's controlling shareholder Beijing Investment Group currently holds 32% of the shares, while the company's second largest shareholder holds 20.78% and has withdrawn from the company's management and management, becoming a financial investor. The control of major shareholders over the company has been further strengthened. Beijing Investment Group, a company 100% owned by Beijing State-owned assets Supervision and Administration Commission, is the main body of investment and operation of urban rail transit construction in Beijing. It undertakes the functions of investment and financing, preliminary planning, asset management, capital operation and related resources development and management of Beijing rail transit and other infrastructure projects, and occupies a monopoly position in Beijing urban rail transit industry. As the only A-share listing platform of the controlling shareholder Beijing Investment Group, the company is expected to further obtain the tilt of group resources in the future.

The main benefit is to complement each other with the business advantages of the controlling shareholders. The company will significantly benefit from the land resources development plate, which is an important "wing" in the "one body and two wings" development strategy constructed by Beijing Investment Group. Relying on the first-level development business of the land along the rail transit line of Beijing Investment Group, the company not only has the comparative advantage of information in the secondary development of land, but also has the technical advantage in the process of building property development, and even deeply participates in the first-level development project. this kind of information and technical advantage has realized the exclusive control to the corresponding land in some procedure. On the other hand, it also opens the premium space of the property through the superior geographical location.

At the same time, under the background of the reform of state-owned enterprises, the market still has great expectations for a variety of business integration at the group level. if this expectation can be realized, it will greatly promote the rapid expansion of the company's asset scale. truly achieve the goal of "bigger, stronger and better".

The company was also branded by Sunshine Insurance Group in 2015. At present, Sunshine Insurance holds 5.01% of the shares, making it the third largest shareholder of the company. Such as Anbang brand financial street and Jindi, Life Life brand Jindi, former sea life card Vanke, etc., most of the listed real estate enterprises with dangerous assets are targets with good performance, stable cash flow and long-term investment value. At the same time, we also believe that the main reason for Sunshine Insurance Group's licensing company is that old-age real estate is becoming the key development direction of housing enterprises in the future, and it is also the key investment direction of insurance enterprises. besides being able to enjoy the income of equity appreciation, it can also achieve the goal of coordinated development with its own business, and a deeper coordinated development can be expected in the future.

Conclusion:

The comprehensive development mode of "track + land" vehicles of the group company has a huge competitive advantage, which has laid a strong foundation for the property development leader of the company's track. The company will significantly benefit from the development of Beijing and Beijing-Tianjin-Hebei rail transit in the future. at the same time, with its own technical advantages and project development experience, the company may also explore more opportunities in the environment of national rail transit development. The withdrawal of China Yintai opens the prelude to a clearer ownership structure of the company. Cheng Shaoliang, a natural shareholder, and JIC Group will gradually reduce their holdings and become a win-win way. We expect the company's operating income from 2016 to 2018 to be 9.82 billion yuan, 11.772 billion yuan and 13.21 billion yuan respectively, net profit of 315 million yuan, 456 million yuan and 663 million yuan respectively, and earnings per share of 0.43 yuan, 0.62 yuan and 0.90 yuan respectively, corresponding to PE 23.08,15.97 and 10.98 respectively.

Maintain the company's "highly recommended" rating.