Main viewpoints

1. The 17-year performance increased by 90% compared with the same period last year. The high advance payment + new income criterion ensured that the 18-year performance company achieved operating income of 15.46 billion yuan in 2017, an increase of 57.2% over the same period last year. The net profit returned to the home was 1.14 billion yuan, an increase of 89.9% over the same period last year, approaching the upper limit of the performance forecast. The sharp increase in the company's performance is mainly due to the sharp increase in the settlement area of real estate and the net profit rate of sales, with a settlement area of 937,000 square meters in 17 years, an increase of 48.7% over the same period last year. The gross profit margin and net profit margin of sales were 32.9% and 7.4% respectively, up 1.0pct and 1.3pct respectively. The accounts received in advance at the end of 17 years are 22.6 billion, covering 1.8 times the 17-year real estate settlement income. in view of the fact that the revision of Accounting income 14 requires AH to start implementation in 2018, which will promote the accelerated settlement of prepaid accounts, 18-year revenue and net profit are expected to maintain a high growth rate.

2. 17-year sales were 22.3 billion, slightly lower than the same period last year, with a land sales area ratio of 156%. The company's 17-year sales volume was 22.3 billion yuan, down 1.3% from the same period last year; the sales area was 1.24 million square meters, down 20.0% from the same period last year, and the average sales price was 18,000 yuan per square meter, an increase of 23.3% over the same period last year. Sales performance is mainly due to the strict visa restrictions in Changsha, while the company announced that the sales caliber is online, so the actual contract sales data may be slightly better. In 17 years, the new construction area of the company was 6.48 million square meters, an increase of 71.4 percent over the same period last year, and the completed area was 139 million square meters, an increase of 178.0 percent over the same period last year. The sales rebate for the whole year is 20.2 billion yuan, and the payback rate is as high as 91%. The company's total sales amount of 9 projects exceeded 1 billion, of which Changsha Beichen Delta achieved a single set sales of 4.84 billion yuan. In the past 17 years, the company has added 1.94 million square meters, including 1.27 million square meters of equity area, accounting for 64% of the total equity area. By the end of 17, the company has laid out 14 cities such as Beijing, Changsha, Wuhan, Hangzhou, Chengdu, Nanjing, Suzhou, Hefei, Langfang, Chongqing and Ningbo, with a total of 38 projects, with a total construction area of 1763 million square meters, with a total value of about 320 billion yuan. strong protection for future sales volume.

3. The value of high-quality properties held in Beijing is seriously undervalued, and the company intends to accelerate the expansion of financing channels. The company holds 1.24 million square meters of investment properties (116.6 million square meters in Beijing + 80,000 square meters in Changsha), and its business is mainly exhibition, commercial, etc., rental income is growing steadily and cash flow is stable (about 2.6 billion yuan).

The above projects are basically located in the core area of the Asian Olympic Games in the north of Beijing. At present, the book price is 5814 yuan / ping, the average commercial price around VS is more than 50,000 yuan / ping, and there is huge room for revaluation; and Qianhai Life Insurance has increased its holdings from 0.95% in three quarters to 2.40%, which shows the recognition of its high-quality assets. In September, the company successfully issued 1.32 billion 5-year tickets (quota 2 billion) with a coupon rate of 5.14%. In addition, it has been approved 4 billion of the non-public issuance of corporate bonds, and the expansion of financing channels will help the company to reduce costs and obtain resources. In addition, the future business and resource integration between groups and listed companies may also be worth looking forward to, and with the continuous promotion of the reform of state-owned enterprises in Beijing, the value of the company's listing platform may be further highlighted.

4. Investment suggestions: great increase in performance, continuous increase in risky capital holdings, change to high-quality targets in Beijing, and maintain a "strong push"

As an enterprise directly under Beijing State-owned assets Supervision and Administration Commission, Beichen Industry has the national expansion of front-end sales and the blessing of back-end owned properties, forming the three major businesses of real estate development, investment property and exhibition management. In 14 years, the company resumed national expansion, the rapid increase in sales contributed to a big increase in advance income, and accelerated the performance release under the new accounting revenue recognition standards. The 17-year performance was 90% higher than the same period last year, and the net profit deducted from non-homecoming increased by 120% compared with the same period last year. Both gross profit margin and net profit margin have increased, and performance is expected to continue to increase next year and the year after next. In addition, the future business restructuring between the company and the group is also worth looking forward to. In view of the acceleration of settlement and the higher-than-expected gross profit margin, we slightly raised the company's earnings per share forecast for 2018-20 to 0.44,0.55 and 0.60 yuan respectively, corresponding to 10.0 times 18PE, maintaining the target price of 7.40 yuan and maintaining the "highly recommended" rating.

5. Risk hints: downside risks in the real estate market