Events:

The company recently released its annual report for 2015. During the reporting period, the company achieved an operating income of 1.88112 billion yuan, an increase of 6.86% over the same period last year; an operating profit of 121.37 million yuan, a decrease of 47.16% over the same period last year; a total profit of 121.4 million yuan, a decrease of 47.68% over the same period last year; and a net profit of 91.52 million yuan belonging to shareholders of listed companies, a decrease of 46.99%. Basic earnings per share were 0.29 yuan, down 46.3% from the same period last year.

Viewpoint:

Although net profit shows negative growth, 2016 is expected to turn the situation around. During the reporting period, the company's operating profit was 121.37 million yuan, down 47.16% from the same period last year, and the total profit was 121.4 million yuan, down 47.68% from the same period last year. On the one hand, under the background of fierce competition among real estate enterprises in Anhui Province, most companies offered price insurance, resulting in an increase in trading volume and a relative decrease in sales in some areas. On the other hand, affected by the project settlement cycle, the company's main operating income during the reporting period came from projects such as Hefei Amber City and Garden, Hefei Amber Fifth Ring City, Bengbu Amber Xintiandi, Guangde Amber Xintiandi and other projects. However, during the reporting period, the company had more projects under construction than completed projects, and the company received a total of 220.8311 million yuan in advance, an increase of 33.4% over the previous year, which has ensured a breakthrough in the company's performance in 2016.

Hefei is the leader of state-owned enterprise reform, and its position advantage will bring excellent resources. Against the background of deepening the reform of state-owned enterprises in Anhui Province, on March 5, 2015, the company received a notice from its parent company, Hefei State-owned assets holding Co., Ltd., to adjust the operating organization of state-owned capital in Hefei. It intends to transfer 185316118 state-owned shares of the company to Hefei Xingtai Holdings Group Co., Ltd., accounting for 57.89% of the company's total share capital. The equity transfer was completed on March 18, 2016, which will undoubtedly be an important development opportunity for the company in the new year.

Hefei Xingtai holding Group Co., Ltd. is a large state-owned company in Hefei, focusing on finance and aiming at building a financial holding company. The aim is to establish and improve the local financial service system of Hefei for the municipal party committee and municipal government of Hefei. Xingtai Holdings Group covers 13 financial and pan-financial fields, including banking, securities, insurance, credit guarantee, asset management, equity trading, trust, fund, financial leasing, pawn, venture capital fund, venture capital and so on. Xingtai holding Group, which has many high-quality assets, will inject new vitality into its development after it enters the urban construction of Hefei. Hefei SASAC has previously made it clear that it will continue to promote the concentration of state-owned financial resources to Xingtai Holdings and turn it into a major financial holding platform. In fact, Xingtai Holdings is also the only financial control platform of Hefei SASAC, and Hefei Urban Construction is the only listed company under Xingtai Holdings, which has a unique advantage in resource integration. Therefore, with the strong support and support of Xingtai Holdings Group, the company has a broad space for development in 2016, and its profitability is expected to make a breakthrough.

The policy of Hefei is good, and the company has a bright prospect of getting rid of inventory. The company's key project layout is in Hefei, Anhui Province. Hefei has issued corresponding housing sales incentives since the third quarter of 2014, such as the lifting of purchase restrictions, and the policy of a minimum down payment of 30% of suites has also been implemented. During the reporting period, Hefei issued a provident fund and housing deed tax subsidy policy. At the same time, in the case of the overall weak performance of the real estate market in Anhui Province, the property market in Hefei is outstanding, with the average housing price rising by about 12%. Due to the changes of the office address of Hefei municipal government and the construction of new subway lines and other factors, the demand has increased, and the level of removal has been significantly improved. Of course, the change in the relationship between supply and demand has also led more enterprises to enter the Hefei market and increase the pressure of competition. This will prompt the company to improve the quality of property and improve the level of management. It is a benign drive for the company and the whole real estate industry in Hefei.

Mature layout and good geographical layout bring new opportunities. In addition to Hefei, the company's layout in second-and third-tier cities in Anhui Province ensures the company's stable growth and competitiveness. Especially the Feidong plot. As the eastern gate of the capital of Anhui Province, the linkage between Feidong and Hefei is strengthening day by day, the geographical location is excellent, the transportation and supporting facilities are improving day by day, and the land price is rising obviously. Because of the low housing inventory and high housing prices in Hefei, many consumers with housing demand began to turn to the surrounding areas, and the average local housing price rose 19.96% during the reporting period. The company has won advantageous plots in Feidong continuously in 14 and 15 years. During the reporting period, the local area to be developed increased by 180700 square meters. Feidong's rigid demand consumer group will drive the company's sales of new projects and performance growth in 2016.

Conclusion:

The company has a special position in the reform of state-owned enterprises in Hefei, enjoying the resources and policy support of the parent company as the only listed company under the financial control platform. The location advantage is obvious. Hefei City, where house prices are rising rapidly and inventory de-stocking pressure is small, and the surrounding cities with good real estate market performance all hold advantageous plots with great potential for performance development. The large amount of accounts received in advance during the reporting period will also be translated into the company's actual income in 2016. no, no, no. We expect the company's operating income from 2016 to 2018 to be 2.445 billion yuan, 3.057 billion yuan and 3.668 billion yuan respectively, and earnings per share of 0.56,0.76 yuan and 0.92 yuan respectively, corresponding to PE of 34.69,25.70 and 21.13 respectively, maintaining a "highly recommended" rating.