Join hands with Hangzhou Mansion to create a regional commercial leader, the huge value of commercial assets to provide a higher security boundary. The company is the retail leader of department stores in Zhejiang Province, with a profound history, with four main stores, such as Xiebai Shopping Mall, Hangzhou Mansion Shopping City, Xiebai Yiwu Store and Xiebalan Creek Store. First, the "Xiebai Shopping Mall" is based on the lakeside business area, adjacent to the West Lake brings considerable passenger flow, commercial property value is huge. Located in the middle and high end, it is composed of three property buildings in the new century, Block B and Xinyuanhua, with a total volume of 130,000 square meters. Second, Hangzhou Mansion perennially ranks first in single-store department store sales in the country, is the top luxury shopping landmark in Hangzhou, and is located in the most prosperous Wulin business district. Blocks A, B, C and D have a total construction area of 180,000 square meters. After the income listing platform of Hangzhou Building, a multi-brand and differentiated management pattern has been formed, laying a solid foundation for the company to win the leading position of the province. In addition, the company has opened department store chains in Yiwu and Lanxi and "Hangzhou Xiebailingyin Shopping Center" in key scenic spots in Hangzhou, which is involved in tourism, private brand development and other fields. to further enhance the market radiation and influence of time-honored brands. It is conservatively estimated that the revaluation of assets is 15 billion, but the current market capitalization is only 7.8 billion, with 92 per cent room for revaluation.

Involved in medical + sports, the transformation of modern service industry, in-depth mining of high net worth customer value. In the past two years, the company has actively transformed to explore medical, sports and other fields, multi-dimensional mining core high net worth customer value. Specifically, first, dabble in medical care. In November, 15 years, the company joined hands with 100 groups and Dean Diagnostics to establish Zhejiang Yihe International Health Management Co., Ltd. (the company contributed 27 million, accounting for 45% of the equity). To provide social high net worth customers with full-process health management and medical services covering the whole life cycle, and actively try to explore the large health service industry. Second, dabble in sports. According to the announcement in January, the company intends to invest 9.2921 million to increase the capital of Yuesheng Sports Brokerage Company (accounting for 65.63% of the registered capital after the increase). The former controlling shareholder of Yuesheng Sports is Hangzhou Sports Development Group, which authorizes the management and operation of municipal sports state-owned assets. The investment is a preliminary attempt by the company to expand its sports business. In the future, it may cooperate with Hangzhou Sports Group's sports venues and other rich resources to speed up the development of sports.

Pay attention to the reform process of state-owned enterprises. First, the major shareholder of the company is Hangzhou Trade and Tourism Group, which is a wholly state-owned company formed by the former Hangzhou Commercial assets Management Company and Hangzhou Tourism Group. Its business covers six major sectors, such as commercial retail and wholesale, catering services, and so on. In the future, with the gradual landing of the reform policy of state-owned enterprises in Zhejiang Province, it may inject and integrate the group's high-quality assets. Second, promote the reform of state-owned enterprises at multiple levels: the central level of ①. The "opinions on the key work of deepening Economic restructuring in 2016" points out that it is necessary to comprehensively implement the guiding opinions on the reform of state-owned enterprises and reform and improve the management system of state-owned assets. The introduction of the "opinions" will push forward the reform process of state-owned enterprises from top to bottom and speed up the pace of policy landing. ② local level. Recently, Zhejiang issued a classified supervision policy for provincial state-owned enterprises, clearly implementing the effective separation of functional and competitive business sectors, and the reform of state-owned enterprises has entered a comprehensive acceleration period. ③ company level.

Due to the background of state-owned assets and competitive environment, the reform of state-owned enterprises is expected to be strong. As the leading department store in Zhejiang Province, the company is backed by Hangzhou Business and Tourism Group with strong resource endowment. In the future, we may benefit from the injection of assets, constantly improve the asset securitization rate and broaden the space for long-term development.

Upgrade to "Buy-A" rating. The company's main business is department store retail, which is located in the core business district of Hangzhou. Its huge commercial value provides a high margin of safety. We will actively explore industrial extension, set foot in the fields of medical treatment and sports, and broaden profit channels. Major shareholders are rich in resources and may benefit from the dividend of state-owned enterprise reform, and asset injection is expected to be continuously strengthened. We estimate that the EPS for 16-18 years will be 0.43 yuan, 0.47 yuan and 0.51 yuan respectively, and the current share price will be 25 times, 23 times and 21 times respectively corresponding to PE, with a 6-month target price of 14.09 yuan, which will be upgraded to the "buy-A" rating.

Risk hint: the investment project does not meet expectations.