We expect contract sales to remain stable. In the first half of 2017, contract sales reached RMB 4.64 billion, an increase of 2.5% over the previous year, reaching 50.0% of the sales target for the full year of 2017. Based on sufficient saleable resources in Shanghai, we expect the company's contract sales to remain stable.

Land replenishment activities will focus on Shanghai, which can guarantee the company's profit margin. Based on its Shanghai state-owned enterprise background, the company expects to further focus on Shanghai and maintain gross margin at around 41.5%. We believe that the restructuring of the company with Shangshi Development (which is expected to be completed by July 2019) can have a positive effect on the company's valuation.

Core net profit increased 0.7% year-on-year to HK$333 million in the first half of 2017, better than our expectations. We raised our core net profit forecasts for 2017, 2018 and 2019 by 11.0%, 38.3%, and 44.7% to HK$609 million, HK$811 million, and HK$884 million, respectively.

Overall, we raised our target price from HK$1.88 to HK$2.00, a 48% discount from its 2017 net assets of HK$3.85 per share, which is equivalent to 15.8 times the 2017 core price-earnings ratio and 0.8 times the 2017 net price-earnings ratio. We maintain “collection.” Risk Factors: Potential loss of asset disposal and possible austerity circumstances.