Over the next 12-18 months, Hong Kong China Travel Service has a number of catalysts, including the acquisition of tourist attractions, development of tourist real estate, and asset optimization. The recovery of Hong Kong's hospitality industry and cultural attractions will bring double-digit profit growth over the next three years. Moreover, market valuations have yet to fully reflect the real estate value of China Travel in Hong Kong. We maintain our buy rating and target price of HK$3.50. Asset optimization, which is the main point supporting ratings, has become a positive factor. We expect the real estate value under the company's name (including land in Zhuhai and Anji, and retail properties in Hung Hom and Mongkok) to be equivalent to HK$1.1/share. Potential asset optimization leaves plenty of room for growth in its real estate valuation predictions. For example, the five hotel properties owned by the company in Hong Kong and Macau were held at a cost of HK$3.1 billion (HK$0.57 per share), but since the hotels were built 20-30 years ago, this value did not reflect a significant increase in value. In addition to existing real estate, the company will cooperate with major domestic real estate companies to develop retail and leisure properties in South China, such as Shenzhen and Zhuhai. We believe that the state-owned platform of China Travel and Tourism in Hong Kong will bring advantages in land acquisition. The core business has bottomed out. We expect the company's core business to achieve double-digit profit growth over the next 2-3 years, mainly due to the upgrading of existing tourist attractions (such as Shapotou and Songshan) and the recovery of the Hong Kong hotel industry. Although hotel profits increased 58% year over year in the first half of 2017, this is still less than half of its peak. In addition, management has stepped up the disposal of loss-making projects, including Yangzhou Metropark Hotel, Jigong Mountain Scenic Area, and Shenzhen Golf Club. In the future, we expect management to focus on profitable projects. For example, Guangxi National Holiday Park is expected to contribute more positive profits in 2-3 years. In 2016, company executives were granted 170 million stock options (accounting for 3% of the total number of shares), which will fully incentivize management to use the advantages of the company's state-owned platform to implement the growth strategy. Rating risk The increase in bidding for high-quality acquisition targets brings downside risks; the execution risk valuation target price for new business development such as real estate is HK$3.5 based on segment plus total valuation, and the holding company is discounted to 10%.