“New retail” will bring new opportunities to the commercial interior decoration business in mainland China. Technology companies are opening offline retail stores to better provide users with experiences that cannot be provided online, such as AR/VR scenarios and face-to-face interaction with sales staff. More and more smaller companies will follow suit, which will drive the growth in demand for mid-range and high-end interior decoration, and will benefit experienced practitioners like Beijing.

The surge in demand for high-end residential leases will bring new growth potential to the home interior decoration business in mainland China. In order to seize the increase in demand for housing leases actively promoted by the 19th National Congress, major real estate developers are actively developing high-end residential leasing businesses. Compared to ordinary rental housing, the renovation cost of high-end homes is much higher, so we expect this will benefit the residential interior decoration business undertaken by Beijing.

We raised our earnings per share forecasts for 2018 and 2019 to HK$0.265 and HK$0.302, respectively, to reflect the anticipated increase in demand for interior decoration business in Beijing. Due to its business model's strong ability to generate cash, the company's dividend payment ratio is expected to remain at 75% or above, corresponding to the expected dividend rate of 3.7% in 2018. We raised our target price slightly to HK$5.40, which is equivalent to 28.1/20.4/17.9 times the price-earnings ratio for 2017/2018/2019. Maintain “collected” investment ratings.