Incident: The company issued an announcement. On November 30, Sunshine Life Insurance Co., Ltd. increased its holdings of Beijing Investment Yintai (600683) shares by 199,900 shares through a centralized trading system, accounting for 0.03% of the company's total share capital. After the increase in holdings was completed, Sunshine Life and Sunshine Financial Insurance held a total of 37.1295 million shares of the company's tradable shares with unlimited sales conditions, accounting for 5.01% of the company's total share capital, surpassing China Yintai to become the company's third largest shareholder and second largest corporate shareholder. Key points: 1. Sunshine Insurance Group, the first strategic investor, entered China's top 500 enterprise. Sunshine Insurance Group Co., Ltd. is one of the top 500 companies in China. It has successfully ranked among the top seven insurance groups in just 3 years since its establishment, surpassed 71 insurance entities established at the same time in 5 years, deployed overseas investment in Internet finance and real estate in 9 years, and successfully entered the healthcare industry in 10 years, becoming one of the fastest-growing companies among global market-based enterprises. At present, Sunshine Insurance Group already owns a number of specialized subsidiaries such as property insurance, life insurance, credit guarantee insurance, asset management, financial services, financial institutions, Huijin Institute, etc., which have gradually become the backbone leading the transformation of the industry. Established in July 2005, Sunshine Property Insurance is a national insurance company that mainly engages in property insurance business. Since its establishment, Sunshine Insurance has set a new historical record for the annual premium scale of newly established domestic insurance companies for many years. Currently, 36 second-level institutions have opened and operated, more than 1,500 third- and fourth-level branches, and the service network has achieved nationwide coverage; Sunshine Life Insurance was founded in December 2007 and is a national professional life insurance company that mainly engages in all personal insurance services such as life insurance, health insurance, and accident insurance. At present, 33 second-level institutions have opened and operated, and more than 800 third-level and four-level branches have been opened. There is a long history of insurance companies listed for a long time. Anbang listed Financial Street and Jindi, Life Life Insurance listed Goldland, and Qianhai Life Insurance listed Vanke. We believe that the main reason why insurance companies list housing enterprises is that old-age real estate is becoming a key development direction for future housing enterprises, and it is also a key investment direction for insurers. Through listing housing enterprises, in addition to being able to enjoy value-added benefits from equity, they can also achieve the goal of collaborative development with their own business. From the perspective of Sunshine Insurance Group, listed companies have two purposes. First, for the purpose of financial investment, they achieve the preservation and appreciation of their own abundant capital in the form of equity investment income; second, they are optimistic about the long-term development of the company. In particular, when China Yintai has a clear exit path, the natural person shareholder Cheng Shaoliang only exercises his rights as a financial investor. Expectations for the majority shareholders to increase their support for the company are heating up, and there are no barriers to the company's future release of performance, and rapid expansion through fixed growth and debt issuance is almost unstoppable. 2. Reducing the holdings of natural person Cheng Shaoliang and increasing the holding of the Beijing Investment Group is a win-win path. Currently, Tokyo Investment Group, the largest shareholder of the company, holds 30.01% of the shares, and Cheng Shaoliang, the second largest shareholder, holds 20.78% of the shares. At the same time, the Beijing Investment Group is unable to achieve absolute control over the company. At the same time, since the actual support for listed companies is not symmetrical between these two major shareholders, this kind of governance structure is not conducive to the long-term development of listed companies. We believe that the successive reduction of Cheng Shaoliang's holdings and the continued increase of the Beijing Investment Group's holdings is the best way to achieve a win-win situation. If the company forms a unique governance structure, it will be more conducive to future capital operation and performance release. The equity structure that may eventually be formed is: Beijing Investment Group holding or absolute holding, and one or more strategic investors participating in the shares. The logic is: Cheng Shaoliang's successive holdings reduction is not disoptimistic about the company's profitability, but rather a sign of abandoning competition for management power. Regardless of whether the Beijing Investment Group increases its holdings or does not increase its holdings, the market's expectations about the relative holding and absolute management of the Beijing Investment Group will come true. The favorable events of the company's implementation of refinancing to reduce financial leverage and accept high-quality asset injections can be realized. The market will not be bearish on the company's stocks based on this favorable expectation. On the contrary, it will look at the stock prices of many companies and will accept Cheng Shaoliang's reduced holdings with high enthusiasm. At that time, the possibility of one or more strategic entry investors will not be ruled out. In the process of this change in equity structure, Cheng Shaoliang can maximize his own interests, and the Beijing Investment Group can also achieve absolute control over the company's management decisions, and be more motivated to make listed companies bigger and stronger. We have been highly recommending the company since August, and in October we wrote an in-depth report “Where to Go After Seven Years of Itch?” We believe that Sunshine Insurance's listing is actually a verification of our investment logic. Before Cheng Shaoliang, the second shareholder, did not actually start to reduce his holdings, Sunshine Insurance had already entered the market, confirming the agency's optimism about the future of the company. This was the first stage of restructuring the company's shares; in January 2016, when Cheng Shaoliang was able to reduce his holdings in the company's shares through the secondary market, this benefit actually came into effect, and institutional investors such as insurance capital and public placement would be more motivated to take over. This will be the second stage in the company's equity change process; after achieving absolute control over the company, asset injection expectations or a high leverage ratio of over 93% Impossibility has not always been the norm. By reducing leverage in the form of “asset injection+fixed increase,” it will be inevitable that the Beijing Investment Group will eventually expand the company's scale. This is the third stage in the company's equity change process; through fixed increment+asset injection, the company “grow bigger and stronger” the company, and the equity pattern of the Beijing Investment Group's single shareholding and multiple strategic and financial investors will be realized. 3. The development of Beijing-Tianjin-Hebei rail transit provides strategic opportunities for the company's development. Relying on the upstream advantage of the holding company Tokyo Investment Group in building property development on rail, the company will significantly benefit from the development of rail transit in Beijing and Beijing-Tianjin-Hebei. At the same time, with its own technical advantages and project development experience, the company may also explore more opportunities in the national rail transit development environment. It is estimated that by 2020, the operating mileage of Beijing rail transit will reach about 1000 kilometers, and the new mileage of rail transit in the Beijing-Tianjin-Hebei region will exceed 2,000 kilometers. We estimate that the total superstructure area of Beijing and Beijing-Tianjin-Hebei rail transit will be about 10 million square meters by 2020, of which about 6 million square meters within Beijing and 4 million square meters outside Beijing. The company has a strong advantage and is expected to obtain a share of 8 million square meters, and reserves will increase by more than 3 times. 4. The company's performance will welcome explosive growth. Since 2012, the company's real estate business has entered a period of rapid growth. With major projects entering the market in 2013, the growth rates of contract sales in 2013 and 2014 were 144.2% and 191.85% respectively. The contract amount is expected to reach 9 billion yuan in 2015, a growth rate of more than 25%, with an average annual compound growth rate of 108.01%. According to current project estimates, we believe that the company's total net profit for 2015-2017 was 276 million yuan, 421 million yuan, and 590 million yuan respectively, and net profit growth rates were 999.49%, 52.20%, and 40.24% respectively. The corresponding EPS also grew rapidly to 0.37 yuan, 0.57 yuan and 0.80 yuan, and the return on net assets broke 10% for the first time since 2010. Overall, the company's profitability will be greatly improved. We used rail superstructure property projects in the market or real estate companies controlled by provincial and municipal state-owned assets commissions as analogies. They are Southern Real Estate, Tahoe Group, Shangshi Development, and Chinese enterprises. The average PE of the four companies in 2015 is expected to be 28.20X, which is basically the same as the company's 28.27X. At the same time, the company specializes in the development of properties built on rail and has core technology, and rail transit construction in and around Beijing will clearly benefit the company. Therefore, we believe that the company, as a leading company in this segment, can be given a higher valuation. At 0.57 yuan per share in 16 years, 30X, the company's relative valuation is 17.10 yuan. The company's main assets are real estate development projects, mainly located in Beijing. As of the end of 2014, the total real estate construction area of the projects held by the company was about 2,682,200 square meters, and the unsettled area was 2.2899 million square meters. The main layout was in Beijing, including the rail superstructure property project and the Tanzhe Temple C plot project. As the company's main projects entered the market in 2014 and settlement began in 2015, we expect the company's performance to experience explosive growth. Based only on the current company's existing projects, the company's NAV value is 11.5 yuan. The company's closing price on December 1 was 10.46 yuan, a 9% discount from the company's NAV price. Conclusion: The group company's “track+land” vehicle comprehensive development model has a huge competitive advantage, laying a strong foundation for the company's leading rail property development leader. Benefiting from the emphasis placed on rail transit construction by the Beijing Municipal Government and the promotion of Beijing-Tianjin-Hebei collaborative development, combined with the strong support and construction of information and technology by group companies, the company will usher in external opportunities for rapid development of properties built on rail. With the withdrawal of the two shareholders, the shareholding structure of the company undergoes major changes, this will help strengthen the majority shareholders' control over the listed company and will catalyze the strong desire of the majority shareholders to grow and strengthen the listed company. At present, Sunshine Insurance Group has registered a listed company and entered the market as the first strategic investor. In the future, more institutional investors can expect to hold shares in the company as strategic or financial investors. We estimate that the company's NAV is 11.5 yuan, which is 9% off the current stock price; using the relative valuation method, the company's valuation is 17.10 yuan. The company's ability to develop superproperty, which is the company's core competitiveness, has been proven by the market. Starting in 2015, the company's operating income and project scale will enter a period of rapid expansion, and the company's net profit is expected to grow at a compound rate of 38.86% over the next 3 years. We expect the company's operating income from 2015 to 2017 to be 4,530 million yuan, 6.641 billion yuan and 9.338 billion yuan respectively, and net profit attributable to the parent company of 277 million yuan, 421 million yuan and 590 million yuan respectively; earnings per share are 0.37 yuan, 0.57 yuan and 0.80 yuan respectively, corresponding to PE of 22.78, 14.96 and 10.67 yuan, respectively. We have always believed that the company has core competitiveness when building properties on rail, and at the same time, we are optimistic about the possibility of major shareholders injecting resources, maintain a “highly recommended” investment rating, and give the company a target price of 15 yuan for 3 months.