Event: Dumas shares recently released the 2017 mid-year report, the company's operating income in the first half of 2017 was 2.379 billion yuan, down 20.27% from the same period last year; the net profit attributed to the parent company was 111 million yuan, down 12.11% from the same period last year; the net profit attributed to the parent company was 104 million yuan after deduction, down 15.23% from the same period last year; the corresponding EPS was 0.05 yuan.

Comments:

There has been a decrease in the delivery of houses and a decline in revenue and profit. In the first half of 2017, the company's real estate and property business achieved revenue of 2.064 billion yuan, a decrease of 22.07% compared with the same period last year, mainly due to the decrease in the number of houses completed and delivered in the current period, the decrease in income carry-over, and the decline in gross profit margin by 1.37pct; the revenue from the special purpose vehicle business was 262 million yuan, down 10.14% from the same period last year, and the gross profit margin decreased by 1.95pct.

Real estate business: successfully achieve the goal of land reserve. In the first half of the year, the company added 7 new land reserves through auction and joint acquisition of land, all of which are located in Suzhou, Zhengzhou, Hangzhou, Chengdu, Chongqing and other important core cities of economic development along the Yangtze River to Central and East China, with a construction area of about 1 million square meters. By the end of the reporting period, the company's land reserve construction area has reached 4 million square meters. In the face of unfavorable conditions such as "limited quantity", "price limit", "existing house sale", "self-supporting clause" and so on, the company has efficiently completed the new land reserve target.

Military business: special-purpose vehicles have a solid market position and join hands with Poly to actively develop new businesses. In terms of special-purpose vehicles, the company's bulletproof escort vehicle series orders and sales increased by more than 20% compared with the same period last year, ranking first in the market share; armored vehicle products have been upgraded, sample car production and announcement declaration work; benefiting from the construction of the national production safety emergency rescue integrated command platform and emergency communication guarantee system upgrade, the company's system integration series product output has increased compared with the same period last year. In terms of overseas markets, the company has actively explored Cuba, Cambodia, Vietnam, Indonesia and other markets, completed the R & D and production of Hong Kong Brink armored car orders, and established a sound sales network, market channels and overseas after-sales service network. for banks and other security system customers, operators in the field of communications to provide a full range of security solutions Through the construction of large customer resources at home and abroad, the company has gradually developed into a global refit vehicle solution expert. In addition, the company actively seeks a broad market space and new profit growth points for the military-civilian integration industry by participating in the Poly Defense Fund, taking a stake in the three Gorges Life Insurance, and vigorously promoting the project process of raising funds for military special vehicles and exoskeleton robots. at present, the Poly Defense Fund has successfully invested in two target enterprises.

Major shareholders increase their holdings, demonstrating confidence in development. On May 10, 2017, Dumas shares issued an announcement that on May 9, 2017, the company's controlling shareholder bot Holdings increased its holdings of 1.74 million Dumas shares through the secondary market, accounting for 0.07% of the company's total share capital. the average transaction price was 5.82 yuan per share, and the total transaction price was 10.12 million yuan. The company said it would increase its holdings through the secondary market within six months from May 9, 2017, with a cumulative increase of no less than 50 million yuan and no more than 1 per cent of the company's total issued shares (including this increase). It is worth noting that as of August 28, 2017, Dumas shares closed at 5.26 yuan per share, lower than the shareholder holding price. We believe that the controlling shareholder's increase in Dima shares shows good confidence in the future development of the company, the current stock price is lower than the previous increase price, the company has a certain investment value.

Profit forecast and rating: we estimate that the operating income of Dima shares from 2017 to 2019 is 18.985 billion yuan, 24.532 billion yuan and 30.533 billion yuan respectively, and the net profit vested in the parent company is 922 million yuan, 1.133 billion yuan and 1.423 billion yuan respectively, and the corresponding EPS is 0.38,0.47 yuan and 0.59 yuan per share. We maintain our "buy" rating on Dumas shares.

Risk factors: under the influence of local real estate regulation and control policies, real estate sales are not as expected; there is uncertainty in private placement; the process of industrialization of exoskeleton robots is not as expected; the benefit of the fund-raising project "New military Special vehicle equipment Project" is not as expected.