Event: on July 19, the company announced the progress of its participation in investing in Qihoo 360's privatization project. A few days ago, Qihoo 360 has suspended the trading of his ADS shares on the New York Stock Exchange and has completed the overseas equity delivery of Tianjin Qixin Zhicheng Technology Co., Ltd., Tianjin Qixin Tongda Co., Ltd. In addition, the company reported that it is expected to achieve a net profit of about 70 million yuan, an increase of 10.4% over the same period last year.

The process of privatization is advancing, or the future may benefit from valuation advantages: the company announces the progress of Qihoo 360's privatization. Qihoo 360 has suspended trading of his ADS shares on the New York Stock Exchange a few days ago, and in accordance with the trading arrangement (except founder shares and dissenting shareholders' shares, all Qihoo 360's issued common shares will be at US $51.33 per common share. Equivalent to ADS's $77 per share cash acquisition and cancellation) and has completed the overseas equity delivery of Tianjin Qixin Zhicheng Technology Co., Ltd., Tianjin Qixin Tongda Co., Ltd. Through two-level investment, the company participated in the privatization of Qihoo 360 with US $89.7143 million. Qihoo 360 is one of the Internet companies with the largest number of users in China, and he is also a leading enterprise in Internet and mobile information security in China. By the end of 15 years, his total assets were US $3.655 billion, with total revenue of US $1.805 billion and net profit of US $304 million. And its industry has broad market prospects, coupled with Qihoo 360 relying on its leading network security technology, 360platform influence and huge user base has formed a unique competitive advantage, and has great potential for future development. The company's participation in investing in Qihoo 360's equity may help the company to achieve higher capital appreciation, improve the efficiency of the company's use of funds and drive the company's investment level to rise.

Concerted efforts, performance increased: the company reported a net profit of about 70 million yuan, an increase of 10.4% over the same period last year (the previous value was 230.49%). The company's performance growth from January to June mainly benefited from 1) in the first half of 16 years, affected by the Brexit referendum, the market risk aversion is high, gold and other safe-haven assets are sought after, gold prices benefit from the rebound. Mingal's gold and ore benefit from the rising price of gold, which leads to an increase in sales revenue. 2) the increase of the company's real estate settlement area and recognized income from January to June led to the growth of the company's performance; 3) the financial territory such as Tianye small loan and Boshen financial leasing was expanded, the business continued to expand, and entered the company's statements in a timely manner, thickening the company's revenue and driving performance growth.

To create the main business and trinity: the company's business is tripod (real estate + finance + mineral). First, the real estate business will still be controlled in line with the size of the company and combined with policy and economy, and strategically actively enter the first line, supplemented by high-quality second-tier projects. The Yangtai Villa project is the first shot to hit the front line of the company. compared with the land king cost price in the surrounding areas, the Yangtai Villa project has obvious cost advantages and is expected to promote the economic benefits of the company's real estate sector in the future; second, the mining assets are of high quality, benefiting from the favorable gold price: the company completed the asset injection of overseas gold Mingal Company in 14 years, which is the first overseas asset injection project of a listed company in China. Mingal has the mining rights of gold resources in the Mingal mining area of Western Australia. In 15 years, the amount of new gold resources conforming to the Australian JORC standard is 1.64 million tons, and the amount of gold metal added is 575 million ounces, equivalent to nearly 18 tons. In the past 16 years, the company has three major measures to boost mineral business. Australian gold mines are optimizing mineral processing methods and expanding the industrial chain, and the ore recovery is expected to increase from 56% to 80%. The company promises that there is a high probability of landing 170 million of the profits in the mineral business over the past 16 years. In addition, we expect that the current mineral mining can continue for 5-6 years, and the company may look for extension projects to expand and strengthen the company's business in the future. third, the company actively arranges "financial plus". By the end of April 16, the company had invested a total of 1.47 billion yuan to set up a partnership investment enterprise, and planned to increase by 3.2 billion to vigorously promote the "financial plus" layout. At the end of June, the company announced that it planned to increase its capital by 159 million, and it will hold a 15% stake in Wanhe Lease after the capital increase, which is another addition to the financial landscape. In addition, the company's community financial Internet integrated service platform is still in the early stage of construction, relying on the company's existing financial service functions, embedding financial services into community services, to build a platform based on community development and property management, with consumer financial services as the core. With the strategic layout of "industry + capital", the company is building a diversified and coordinated development platform for the trinity of real estate, mining and finance, and the financial business can well feed the geological and mineral industry, better realize the combination of industry and finance, and complement each other.

Investment suggestion: the company's real estate business is on the front line, and it is expected to bring new growth points of real estate business in the future; mining business finds out nearly 2 million ounces of gold metal through optimizing mineral processing forms, while expanding the industrial chain to increase sales of black dog ore, the performance commitment is basically completed; in addition, the company's participation in Qihoo 360 privatization project may benefit from Qihoo 360's privatization acquisition in the future, bringing new business growth points for the company. And a few days ago to increase capital Wanhe lease, and then expand the financial landscape, combined with the company's capital-intensive real estate and mining, financial assistance to better achieve the combination of industry and finance, complement each other; we expect the company's EPS in 2016-2018 to be 0.20,0.27,0.34, and the previous share price PE valuation is 83.1X, 61.3X, 48.4X, given the "buy-A" rating, 6-month target price 19.8 yuan.

Risk Tip: performance falls short of expectations