Matters: On January 30, Beichen Industrial issued a performance forecast announcement. The company's net profit for 2017 is estimated to be 975-1,065 million yuan, an increase of 75%-90% over the previous year; net profit after deducting non-return net profit is expected to be 1,31-1,321 billion yuan, an increase of 110%-125% over the previous year. According to Kerry data, in 2017, the company achieved a cumulative contract amount of 22.64 billion yuan, an increase of 0.2% over the previous year; the cumulative contract area was 1,281,000 square meters, a year-on-year decrease of 17.4%; in 2017, the company added 1,464 million square meters of construction, a year-on-year decrease of 44.8%; and a total land price of 15.06 billion yuan, a year-on-year decrease of 3.0%. Main views: The performance for the year 1 and 17 increased by 75-90% year on year. The high advance payment+new revenue standard ensures the 18-year performance. The company's net profit for 2017 is expected to be 9.75-1,065 billion yuan, an increase of 75%-90%; net profit after deducting non-return to the mother is expected to be 12.31-1,321 billion yuan, up 110%-125% year on year. The company's performance rose above expectations mainly due to a sharp increase in real estate settlement area and a sharp increase in settlement gross margin. As of the end of 17Q3, the company's net interest rate was 8.3%, up 2.4 pct year on year; the total cost rate for the three categories was 11.9%, -6.7 pct year on year; the recovery in net interest rate stemmed from a sharp decline in the three cost rates, and the company's three fee rates continued to improve since 2015. Given that the revision of Accounting Revenue Standard 14 requires AH to begin implementation in 2018, which will promote the accelerated settlement of advance accounts and the company's current high advance accounts, it is expected that the company's operating income and net profit will maintain a high growth rate in 2018. 2. Sales in 2017 were 22.6 billion yuan, flat year on year, land acquisition progressed steadily, and tier 1 and 2 increased by 84%. According to Kerry's data, in 2017, the company achieved a cumulative contract amount of 22.64 billion yuan, an increase of 0.2% over the previous year; the cumulative contract area was 1,281 million square meters, a decrease of 17.4% over the previous year; sales performance was generally mainly due to strict signing restrictions in Changsha, while the company announced sales volume data online, so the actual contract sales data may be slightly better. As of the end of the third quarter, the company received 22.58 billion yuan in advance accounts, 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 performance in 18-19. In 2017, the company added 1,464,000 square meters of construction, a year-on-year decrease of 44.8%, but first-tier and second-tier cities such as Beijing, Chengdu, and Wuhan accounted for 84% of the new area; the total land price was 15.06 billion yuan, a decrease of 3.0% over the previous year; and the land acquisition sales ratio was 0.67, maintaining the trend of increasing inventory and land acquisition. 3. The value of high-quality property holdings in Beijing is seriously underestimated. The expansion of financing channels is intended to accelerate expansion. The company holds 1.24 million square meters of investment properties (1.16 million square meters in Beijing+80,000 square meters in Changsha). The main business is exhibitions, commerce, etc., with steady growth in rental income and stable cash flow (about 2.6 billion yuan). The above projects are basically located in the core area of the Asian Olympics in the Beijing North Fifth Ring Road. Currently, the unit account price is 5,814 yuan/flat vs. the surrounding commercial average price exceeds 50,000 yuan/square meter, so there is huge room for revaluation; furthermore, Qianhai Life Insurance increased its holdings by 0.95% in the third quarter, which shows recognition of its high-quality assets. In September, the company successfully issued 1.32 billion 5-year vouchers (amount 2 billion), with a coupon interest rate of 5.14%. The expansion of financing channels helped the company reduce costs and obtain resources. Furthermore, future business and resource integration between the group and listed companies 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. 4. Investment suggestions: The performance has greatly exceeded expectations, and Beijing has improved its high quality target. As an enterprise directly under the Beijing State Assets Administration Commission, Beichen Industrial has maintained a strong recommendation rating. As an enterprise directly under the Beijing Municipal State-owned Assets Administration Commission, it has expanded nationwide in front-end sales and supported by back-end owned properties, forming the three major businesses of real estate development+investment property+exhibition management. In 2014, the company restarted nationwide expansion, and rapid sales growth drove a sharp increase in advance payments, and accelerated performance release under the new accounting revenue recognition standards. In 2017, performance increased 75-90% year on year, and net profit after deducting non-return mother increased 110-125% year on year. This year and next year, it is expected that performance will continue to increase. 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. In view of accelerated settlement and higher gross margin than expected, we raised the company's earnings per share forecast for 2017-19 to 0.33, 0.43, and 0.55 yuan, corresponding to 18PE, 12.2 times, respectively, and the target price of 7.40 yuan, maintaining the “highly recommended” rating. 5. Risk warning: downside risk in the real estate market.