Key investment points Recently, the Societe Generale Real Estate team conducted exclusive research on the 365 Network Research time: January 25, 2016 Research subjects: Chairman: Zhang Hailin; General Manager: Qi Dong; Director: Ling Yun; Certification: Huang Jie, Company's future development strategy: Based on the advantages of online platforms, sharing the huge market of post-real estate services. Based on the advantages of real estate information platforms, the company adheres to an asset-light model and will not easily switch to “asset-heavy” transactions. In the future, investment in the financial sector will be increased; in terms of models, they will still insist on monetizing online portal traffic; regionally, based on the existing urban layout, they will choose opportunities to enter other cities with opportunities in the future. Internet small loans have made a breakthrough, helping the development of real estate finance. In January 2016, the company plans to jointly invest 350 million yuan with Jiangsu AnjiaLoan Financial Information Service Co., Ltd., Qixia Construction, and Shenzhen Cornerstone Venture Capital, which are wholly-owned subsidiaries of the company, to establish Nanjing 365 Internet Microfinance Co., Ltd. Among them, 365 Network invested 240 million yuan, accounting for 68.57% of registered capital. The source of capital for the small loan business is mainly its own capital. The company hopes to segment the real estate industry and create an “Internet+Real Estate+Finance” inclusive financial platform serving small and micro enterprises and consumers. The development of small loan business can solve the problem of high capital costs that currently exist in the company's financial business development process. At the same time, it can also solve bottlenecks such as the impossibility of implementing risk control measures such as mortgages and guarantees, and improve the safety of financial business. The company has a deep layout in the field of real estate finance. (1) Home Loan Platform: In November 2014, 365 Network used 120 million yuan of overraised capital to establish Jiangsu Home Loan Finance to build a capital circulation platform for homebuyers, home improvement consumers, and capital providers. Currently, the business mainly focuses on new mortgages, with short-term terms (about 3 months). The balance of home loan loans in 2015 was about 200 million yuan, with an average transaction size of about 200,000 yuan. The Home Loan financial platform is currently not profitable, but this business is expected to be the company's biggest room for development in the future. Currently, it has applied for an Internet small loan license. In the future, considering the company's development needs, it is possible to apply for other related licenses. (2) Cooperation with the Central Plains: 365 Network cooperated with Zhongyuan Group in the field of real estate finance in October 2015. Relying on a powerful home loan platform, 365 Network will provide the Central Plains Group with a full range of financial products. The initial cooperation was between Nanjing and Shanghai. The company will provide the Central Plains with five types of financial products according to the various capital needs of consumers when buying and selling new and second-hand housing. The company's O2O decoration will rely on the new housing business to focus on finished housing products. The opportunities for O2O decoration are mainly in finished housing, second-hand housing decoration, decoration supply chain integration, and new one-stop home packaging. The company has made some adjustments to its strategy in accordance with practice. In the future, the decoration business will mainly be integrated with the new housing business, and decoration services will be provided through finished housing. Investment advice: We are optimistic about the in-depth layout of 365 Network in the real estate after-sales service market and the company's long-term development prospects. The 2015-2017 EPS is expected to be 0.66, 1.0, and 1.5 yuan, and the corresponding PE is 48, 32, and 21 times, respectively. It was covered for the first time, and a “accumulation of holdings” rating was given. Risk warning: The recovery in real estate sales fell short of expectations.