1. Overview of the incident We researched Hualian Co., Ltd. and exchanged views with company executives on future development strategies and cooperation plans with the CITIC Industrial Fund. 2. Analysis and judgment focus on shopping center positioning, and diversified business formats enhance competitiveness. Since 2008, the company's main business has been transformed into shopping center operation and management. Long-term professional experience and extensive customer resources in the retail industry have given the company a strong competitive advantage in commercial real estate investment, development and rental and sales. Facing the diversion brought about by e-commerce online shopping, the company has built various business formats such as department stores, supermarkets, specialty stores, and restaurants around the market positioning of community-based shopping centers, increasing the proportion of experiential consumption, and focusing on the professional planning and design of stores and the diverse combination of tenant resources, so the ability to attract customers is constantly improving. Furthermore, the company's strategic plan uses Beijing as the core development area. Currently, the shopping center area per capita in Beijing is still at a low level in large cities, which can bring a lot of room for growth to the company. At the same time, the company will actively lay out potential second-tier city properties, or introduce the company's strategic partner tenants in shopping centers to increase investment bargaining chips using the driving effect of the main tenants on investment promotion. We are optimistic that the company will build a shopping center that integrates multiple business formats and has distinctive characteristics. In the future, it may continue to increase the share of emerging experiential content such as “eat, drink, and play” to attract a greater flow of visitors. Jointly with the CITIC Industrial Fund, high-quality equity investment companies adjusted their fixed growth plans in April 2016. It is planned to purchase shares of both Hairong Xingda and Shanxi Hualian at 3.43 yuan/share from Shanghai Rongshang and CITIC Mezzanine, and raise 860 million yuan in supporting capital from Shannan, Tibet for the subsequent construction and decoration of shopping centers being built by the target company. After the fixed increase is completed, CITIC Industrial Fund will indirectly hold 18.41% of the company's shares through Shanghai Rongshang, CITIC Mezzanine, and Shannan in Tibet, becoming the company's second largest shareholder. Previously, the company and subsidiaries have successfully cooperated with CITIC Industrial Fund and invested in projects such as “Sing” and “Are You Hungry”: 1) The addition of “Sing” KTV physical stores will help the company's stores attract more young consumers, increase customer consumption stickiness, and give shopping centers more entertainment attributes, driving the company to further develop differentiated operations; 2) The catering industry accounts for a high proportion of the company's stores, and “Are You Hungry?”, as a leading mobile food service platform, has strong business complementarity with the company. The cooperative companies of the two sides can provide more convenient online services to residents around the community, and try more convenient online services line Lower integrated development. We believe that in the future, the company will continue to aim for financial investment and strategic cooperation, rely on the strong project resource advantages and capital advantages of the CITIC Industrial Fund, continue to explore high-quality projects, or focus on investment in related business formats (such as catering, entertainment, community services, etc.) that can bring synergy to the main business to enhance the overall level of profit. The BHG retail trust was successfully issued, and the asset-light strategy accelerated. Since shopping centers have problems such as heavy assets and long nurturing time, the company has begun to gradually promote an asset-light operation strategy in order to improve the efficiency of capital use. In 2015, the BHG Retail Trust (BHGretail REIT) initiated by the company was listed in Singapore with an issuance scale of approximately S$394 million. As of 2015, due to the “green shoe” arrangement, the company's share of REITs accounted for 0.58% of the total distribution share, and Hualian Group, the majority shareholder, accounted for 30.10%, making it the largest share holder. REITs holds shares in five shopping malls sold by the company: Beijing Wanmao, Hefei Ruian, Qinghai Xinglian, Chengdu Hairong, and Dalian Hualian. Currently, all shopping malls have opened, providing stable rental income. As the sponsor, trust share holder, fund manager, and property manager of REITs, the company can obtain rich management income and trust income. This type of high-margin business can help companies improve cash flow, optimize financial structures, and enhance the company's ability to operate and manage capital in commercial properties. The successful issuance of BHG Retail Trust has solidified the foundation for the company to implement an asset-light strategy. In the future, the company may continue to sell mature properties to REITs and retain management rights, adopt models such as rent collection and management, and enjoy value-added property benefits and operating management benefits. 3. The profit forecasting and investment recommendation company is the only listed company in China that focuses on the operation and management of shopping centers. Its shopping malls combine various consumption formats such as shopping, catering, entertainment, and community services. After a fixed increase is introduced into the CITIC Industrial Fund, the company may significantly accelerate the pace of foreign investment, which is expected to usher in a new profit growth point. We are optimistic about the further advancement of the company's asset-light strategy. The 2016-2018 EPS is expected to be 0.16 yuan, 0.23 yuan, and 0.32 yuan. First coverage, giving a “Highly Recommended” rating. 4. Risk warning: The macroeconomic downturn; the performance of equity investment targets falls short of expectations.