Main points of investment:

Events. The company publishes its 2016 semi-annual report. During the reporting period, the company realized operating income of 3.41 billion yuan, an increase of 41.3% over the same period last year; net profit belonging to shareholders of listed companies was 177 million yuan, an increase of 34.6% over the same period last year; and basic earnings per share was 0.17 yuan.

In the first half of 2016, driven by the increase in carryover, the company's revenue increased by 41% and the company's net profit increased by 34.6%. In the first half of 2016, the company completed roads, river courses, road lighting, greening and other projects, completed house construction area of 672 million square meters, and newly started housing construction of 101600 square meters. In the first half of the year, the project sales of Xianglongyuan Phase II and Phase I completed 93.7% and 76.8% respectively, and the sales of Yisheng Garden residential shops and projects completed 59.3%. Block An and B of Wanhe City 01 in Lvdu have been completed and delivered with a delivery area of more than 220,000 square meters. The fine decoration of the hotel in Building 1 of the Suzhou Lanting Peninsula Life Plaza (Suzhou Dushu Lake Moon Bay Project) has been basically completed and is preparing for the opening of the hotel. In the first half of 2016, the production and sales of denim fabric increased compared with the same period last year, and the transformation effect of independent brand ERQ was beginning to show. Since 2016, the company has strengthened the post-investment management of Ji Xing Technology, Sinosteel New Type and other projects. At the same time, we will promote the post-investment management of Yixing Fund, Jintan Zhonghe Fund and Jinrui carbon Materials Cooperation Fund, and pay close attention to the progress of the invested projects such as Kateeva, Changshu Auto Decoration, Haiyi Technology, Zhongbei Tong Magnetic, Sinosteel New Type, Getty Electric Power, Landmark Science and Technology, etc. In the first half of the year, the company completed the establishment of the "China Changzhou Inspection and Certification Industrial Park" and the signing of the first batch of 8 resident enterprises. In June 2016, the company increased its capital of Black Peony (Hong Kong) Development Company by 440 million yuan and set up a wholly owned subsidiary Peony Xinlong Company with 650 million yuan. In July 2016, the company invested 240 million yuan to jointly establish Changzhou Local legal person Life Insurance Company.

Investment advice: definitely increase the introduction of individual shareholders, raise funds to enhance the staying power of development, and maintain the "overweight" rating. The company integrates textiles and clothing, urban comprehensive development and industrial investment. On behalf of the government, the company is carrying out full-service deep ploughing and development of the New North District; the 17.5sq km high-speed rail area and Wanqiang fertile land project during the first phase of construction are progressing smoothly, and the second phase of land development is under way. According to the contract, the company will receive 10% of the project income and 5:5 share of the income. The New North District, which has a low price-to-income ratio of 439 square kilometers in Changzhou, has only developed 1Comp5, which has room for expansion in the future. The company promotes the textile and clothing to rejuvenate through the brand strategy (self-created jeans ERQ brand). The Changshu auto decoration invested by the company is expected to go on the market. Therefore, we estimate that the company's EPS in 2016 and 2017 is 0.38 yuan and 0.47 yuan respectively, and the corresponding RNAV is 11.1 yuan. Taking into account the company's fund-raising to enhance the staying power of development, we take the company's RNAV, that is, 11.1 yuan as the company's target price for the next 6 months, to maintain the "overweight" rating.

Risk hint: the real estate industry is facing regulation and hindrance to corporate transformation.