After entering the first-level land development business, the company will strengthen its asset disposal capacity, leading to increased profits. We expect unaudited pre-tax earnings from asset disposal in Changsha and Fuzhou to be approximately RMB 591.1 million.

We expect contract sales growth to be mediocre. In 2017, contract sales reached RMB 5.94 billion, a year-on-year decrease of 10.0%, reaching 63.9% 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.

In the future, 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 focus further on Shanghai and maintain gross margin of the Shanghai project at around 41.5%.

Core net profit in 2017 increased 11.0% year over year to HK$568 million, lower than our expectations. We lowered our core net profit forecasts for 2018 and 2019 by 20.4% and 20.0% to HK$645 million and HK$708 million, respectively.

Overall, we lowered our target price from HK$2.00 to HK$1.86, a 53% discount from its 2018 net assets of HK$3.96 per share, which is equivalent to 13.9 times the 2018 core price-earnings ratio and 0.7 times the 2018 net price-earnings ratio. We maintain “collection.” Risk Factors: Potential loss of asset disposal and possible austerity circumstances.