Investment logic The annual sales volume and settlement scale increased significantly: in 2015, the company's sales, sales payback, and carry-over revenue all exceeded 8 billion yuan, a significant increase over the previous year; of these, operating income was 8.46 billion yuan, a year-on-year increase, and sales volume was about 8.3 billion yuan (considering the Nanjing brokerage project), an increase of about 103.9% over the previous year. The company carried out 17 construction projects last year, with a total construction surface of 2,384,000 square meters, including a new construction area of 122,000 square meters, an area under construction of 1.296 million square meters, and a completed area of 966,000 square meters. The company's carry-over volume will gradually increase until '16 and '17. The real estate inventory structure is reasonable and the land cost is low: the company has 2.179,000 square meters of land to be developed, mainly distributed in Ningbo, Shanghai, Nanchang, Zhoushan, and Jeju Island in South Korea. The company's real estate development mainly adopts maintenance and optimization strategies. In addition to bidding, it also supplements land resources in Shanghai, Nanchang and other regions through various methods such as cooperative land acquisition, old renovation projects, and auction projects. Judging from the current inventory, the land cost for the company's unsettled projects is relatively low. Acquisition of ARC, real estate+automobile, two-wheel drive: On March 2, 2016, the company announced plans to issue shares to purchase Ningbo Haosheng shares held by Tibet Yinyi, a wholly-owned subsidiary of the majority shareholder, Yinyi Holdings. The estimated value of assets was 3.3 billion yuan; at the same time, Yinyi shares raised 825 million yuan in supporting capital from the private offering of Yinyi Holdings. The entire transaction involved a total of 4.125 billion yuan, subscribed by controlling shareholders and related companies. The issued shares were purchased at a price of 591 yuan/share, and the number of shares issued was 100 million shares; the issue price of shares issued under supporting financing was 8.06 yuan/share, and the number issued was no more than 102 million shares. The company's car+real estate two-wheel drive pattern is expected to take shape rapidly. Leading the world in segmentation and large domestic market space: ARC Group is a global auto parts manufacturer headquartered in Tennessee, USA. It has established 6 production bases in 4 countries around the world. Its products are widely used in automotive airbag systems and are core components of automotive passive safety systems. ARC Group was the first leading company to develop mixed gas generators and has an absolute advantage in technology. Currently, there are 121 relevant patents and 10 registered trademarks, and strong R&D capabilities. As domestic automobile safety application standards are gradually being integrated into the international market, ARC has broad market space in the domestic market. The investment proposal takes into account the company's project settlement progress and future layout of the automobile industry. We expect the company to achieve an EPS of 0.27 yuan in 2016, corresponding to the current stock price of 38PE. Considering the company's strong layout in the field of automobile safety, coverage is given an increase rating for the first time. Risks suggest that the settlement of real estate sales and the integration of the automotive safety industry chain fell short of expectations.