Core opinion: Property disposal increased profits, and it will take time for Japan Hualian Co., Ltd. to release its semi-annual report. 1H16 revenue was 525 million yuan, down 17.5% year on year; imputed net profit was 46 million yuan, up 29% year on year, of which investment income was 293 million yuan; net loss after deduction of 118 million yuan, slightly higher than 109 million yuan of non-net losses in the same period last year. 1) The core profit model of the company's main shopping and operation business is to build/buy properties, sell return capital after operation is mature, and continue to operate the property as the operator (leased properties are the difference between the company's rent and the merchant's rent), so they have to bear losses during the cultivation period; 2) The decline in 1H16 revenue is mainly due to project disposal (5 in 15 years+2 in the first half of the year), and investment income is also mainly due to disposal profits; 3) Considering that most of the disposal projects are mature projects, losses after deduction have not increased significantly year-on-year, indicating that losses and losses are still within the scope of manageable sales; Management expenses increased 21.3% year over year to The 223 million yuan reflects that in an environment where offline consumption is generally sluggish, there is a lot of pressure on the company to train new projects (a net increase of 13 projects in 15 years), and it will take time for the main shopping center business to reverse losses. The general logic of transformation is clear, and the company's logic is very clear. The company's general logic is to dispose of return capital from property, add capital to the CITIC Industrial Fund (holding 18.4% of shares after completion, becoming the company's second largest shareholder), connect with investment and incubation in high-quality consumer projects under the Industrial Fund, and transform shopping center operations and equity investment into a two-wheel drive. In addition to the Hungry? (90 million US dollars) and Song Bar (160 million yuan) projects, which were invested in the first half of the year, the company completed investment in projects such as World Residences (230 million) and Changping Longde Plaza (115 million yuan), and completed investment in asset management subsidiaries Hualian Hairong (Hengqin) (500 million yuan) and Shenzhen Chishan (100 million yuan). The company's fixed increase meeting has not yet passed (the first round of feedback was completed in early July), and is currently actively cooperating to promote the completion of the fixed increase project. Considering subsequent property disposal and equity investment income and loss reduction in the main shopping center business, the impact of fixed increases will not be considered yet. The EPS for 16-18 is expected to be 0.15/0.20/0.26 yuan, respectively. Maintaining the “buy” rating risk warning: the fixed increase did not pass; the investment process fell short of expectations; and offline consumption continued to be sluggish