Report summary: The decline in eviction compensation revenue led to a decline in performance. In the first half of 2017, the company achieved total operating income of 12.5 billion yuan, an increase of 95% over the previous year; realized net profit after deduction of 90 million yuan, an increase of 75% over the previous year; and achieved earnings of 0.05 yuan per share. The company's main business turned a loss into a profit. Due to a sharp decline in land compensation revenue, the net profit of the company declined sharply, but considering the income from logistics real estate, it is expected that the company's performance will remain relatively stable over the next three years. The improving economy has driven significant growth in logistics business, and car-free carrier business is growing rapidly. The company's business is closely related to commodities such as iron ore, steel, and coal. In the first half of the year, commodity logistics stabilized and improved. The company achieved logistics business revenue of 3.46 billion yuan, an increase of 162.6% over the previous year, and achieved logistics trade business revenue of 8.97 billion yuan, an increase of 80.5% over the previous year. Among them, inbound and outbound revenue was 310 million yuan, up 23.3% year on year; distribution and transportation business revenue was 2.59 billion yuan, up 661.3% year on year; and container business revenue was 0.4 billion yuan, up 7.2% year on year. The company's business structure continued to be optimized, with spot market revenue falling 10% year on year and movable property supervision revenue falling 50% year on year. In the first half of the year, China Storage Intelligent Transport's business developed rapidly, achieving revenue of 2.35 billion yuan, completed 246,000 transactions, and a transaction volume of 2,798 billion yuan. Car-free carriers became the highlight of the company's business growth. The company's transformation strategy continues, and the logistics real estate business is progressing in an orderly manner. The company's development strategy will be based on logistics and expand integrated logistics services from multiple links. The company's commercial real estate project continues to advance. The Shijiazhuang China Storage City Plaza project is in foreign business, and the pre-sale of the Nanjing China Storage Power Construction Project has begun. In terms of logistics base construction, construction of logistics bases such as Xi'an Iron and Steel Logistics Base, Shanghai Lingang Fengxian Phase II, China Storage Liaoning Logistics Industrial Park Phase I Phase II, Tianjin China Storage Land Port Modern Logistics Distribution Center, and Tianjin China Storage Lu Tong Futures Delivery, Sorting and Processing Center is progressing in an orderly manner. The introduction of Prologis will impact the company on multiple levels. Cooperation between the company and Prologis continues. It is proposed to establish a joint venture to invest and manage new logistics base projects to cultivate new business models or improve existing models for the company. The company's 2017-2019 EPS is expected to be 0.32, 0.32, and 0.33 yuan respectively, and PE is 28x, 29x, and 28x respectively. We are optimistic about the company's development in the long term, but considering that the company's performance is greatly affected by commercial real estate factors in the short term, we maintain the company's “increased holdings” rating. Risk warning: The commodity boom was lower than expected, and the pace of commercial real estate development fell short of expectations.