Matters: On the evening of October 26, Beichen Industrial released its 2017 three-quarter report, announcing that it achieved operating income of 10.104 billion yuan, an increase of 39.12% over the previous year; realized net profit attributable to shareholders of listed companies of 835 million yuan, an increase of 96.83% over the previous year; and earnings per share of 0.25 yuan, an increase of 92.31% over the previous year. In addition, the company announced sales volume of 14.738 billion yuan for the first three quarters of 2017, a year-on-year decrease of 21.65%; the sales area for the same period was 824,500 square meters, a year-on-year decrease of 37.07%. Main views 1. The performance for the first three quarters increased by 97% year on year, and the three cost rates continued to improve significantly for three consecutive years; achieved operating income of 10.11 billion yuan, +39.1% year-on-year; achieved net profit attributable to shareholders of listed companies of 840 million yuan, +96.8%; basic earnings per share of 0.25 yuan, +92.3%; gross margin and net profit margin were 32.1% and 8.3%, respectively, -2.6 and +2.4 pct; the total cost rate of the three categories was 11.9%, y-6.7pct; the source of improvement in net interest rate Due to the sharp decline in the three fee rates, the company has continued to improve the three fee rates since 2015. At the end of the reporting period, the debt ratio and net debt ratio were 83.1% and 157.0%, respectively, compared to +2.2 and +21.0pct at the end of 2016, respectively. The increase in the debt ratio stemmed from the company's active expansion in the land market. 2. The sales performance for the first three quarters was average. The annual sales target of 20 billion yuan is expected to be achieved. The sales amount for the first three quarters of 2017 is expected to drop slightly to 14.738 billion yuan, a year-on-year decrease of 21.65%, and 73.7% of the annual sales target of 20 billion yuan. The sales performance is generally mainly due to strict signing restrictions in Changsha, and the company's announced sales volume is online, so the actual contract sales data may be slightly better; the sales volume for the same period is 824,500 square meters, down 37.07% year on year; sales payback is 14.78 billion yuan, down 17.0% year on year; sales payback is 14.78 billion yuan, down 17.0% year on year However, the repayment rate reached 100.3%; at the end of the third quarter, pre-collected accounts were 22.58 billion yuan, an increase of 31% over the previous year, and covered 3.2 times the settlement revenue of the real estate development business in 2016, and there was an upward trend in gross margin. Overall, this will form a strong guarantee for the company's 17-18 performance. 3. The value of high-quality property held in Beijing is seriously underestimated. Q3 insurance capital increase recognizes that its high-quality asset value company holds 1.24 million square meters of investment properties (1.16 million square meters in Beijing+80,000 square meters in Changsha). The business business is mainly exhibitions, commerce, etc., rental income is growing steadily and cash flow is stable (about 2.6 billion yuan), general rental income is steady growth and cash flow is stable (about 2.6 billion yuan). The rental income of investment properties in the first three quarters of 2017 was 2 billion yuan, up 2% from the previous year; the above projects are basically located in the core area of Beijing's North Fifth Ring Road, with a current book price of 5,814 million square meters The average price of yuan/ping vs. surrounding commercial price is over 50,000 yuan/ping, so there is huge room for revaluation; we estimate that the above assets are valued at 44.2 billion yuan (without deducting liabilities), the company value is clearly underestimated, and Qianhai Life Insurance increased its holdings by 0.95% in the third quarter, which shows recognition of its high-quality assets. 4. Expansion slowed slightly, and the expansion of financing channels helped reduce costs. In the first three quarters of 2017, which was the high-quality target of state-owned enterprise reform in Beijing, the company added a total land storage construction area of 1.23 million square meters (planned construction area of 1.13 million square meters), a year-on-year decrease of 25%; a new construction area of 1.18 million square meters, a year-on-year decrease of 8%; a completed area of 490,000 square meters, a 45% year-on-year decrease; in addition, in September, the company successfully issued 2 billion 5-year securities, with a coupon interest rate of 5.14%. The expansion of financing channels helped the company reduce costs and obtain resources; furthermore, between future groups and listed companies The integration of business and resources may also be worth looking forward to, and as the reform of state-owned enterprises in Beijing continues to advance, the value of the company's listing platform may be further highlighted. 5. Investment suggestions: Double performance, increase insurance capital holdings, and Beijing reform high-quality targets. Maintaining a strong recommendation for Beichen Industrial as an enterprise directly under the Beijing Municipal State-owned Assets Administration Commission, it has expanded front-end sales nationwide and supported by back-end owned properties, forming the three major businesses of real estate development+investment property+exhibition management. In 2014, the company resumed national expansion, and rapid sales growth drove a sharp increase in advance payments. Performance in the first three quarters doubled, and it is expected that performance will continue to reverse this year and next year. Furthermore, future business restructuring between the company and the group is also worth looking forward to; it is a high-quality target for state-owned enterprise reform in Beijing. Since the improvement in gross margin was better than our expectations, we raised the company's earnings per share forecast for 2017-18 to $0.29 and $0.36, respectively, and maintained the target price at $8.24, maintaining a highly recommended rating. 6. Risk warning: downside risk in the real estate market.