The settlement of high-margin projects drove a sharp increase in net profit, and sales can be expected throughout the year: The reason why net profit growth in the first half of the year was much higher than operating income was: 1. Settlement of high-margin projects in East China during the reporting period drove the gross margin of the company's real estate development business to rise to 40.72%; 2. The increase in gross profit during the reporting period led to a significant increase in land tax increases, compounded by the impact of the high base on investment income last year, and the comprehensive net profit margin increased 3.62 percentage points from the previous year to 12.97%. The company signed a contract amount of 13.595 billion yuan in January-June, an increase of 28.73% over the previous year, and achieved 54% of the annual sales target; the company's willingness to promote sales in the first half of the year was positive, and the new construction area increased by 204% year on year. We believe that the company's new construction in the first half of the year, especially the second quarter, will provide sufficient value for sales in the second half of the year. In the second half of the year, the company's large market project in Jinshan District of Shanghai will also be launched soon, so it is worth looking forward to the company's annual sales target. The willingness to replenish goods is strong, and the business model is innovated, transformed and upgraded: in January-June, the company added 760,900 square meters of land storage, an increase of 1187% over the previous year; land acquisition and construction accounted for 71% of the sales area in the first half of the year, demonstrating an active intention to expand land storage. Looking at the regional structure, the East China region with Shanghai as the core is the main one, and the layout of the central and western regions has been increased, and projects have been obtained in Chengdu and Changsha, respectively. The company is also actively promoting the innovation, transformation and upgrading of business models, and is actively promoting in the fields of guaranteed housing, urban villages, historic towns, Yin Shi Farms, urban renewal, rental housing, and logistics parks. We believe that diversified and flexible expansion methods will become an important means and means for the company to expand land storage in Shanghai in the future, and that the company will continue to rely on resource endowments and business model innovation, transformation and upgrading to consolidate its dominant position in Shanghai real estate related fields. By actively expanding financing methods, the debt level has risen: following the issuance of the first CMBS order of 880 million yuan by a Shanghai state-owned enterprise in February, the company issued 600 million yuan of perpetual bonds in August, with an interest rate of 7.25%; in the same month, the company also signed a five-year debt investment plan with Pacific Asset Management. As of the end of June, the company's net debt ratio was 161%, and the short-term debt pressure was 1.43, up 27 percentage points and 0.13 respectively from the end of 2017. We believe that relying on the resources and platform advantages of the majority shareholders and actively exploring innovative financing methods, the company will provide a long-term stable and high-quality source of capital for its own access to resources and sustainable growth. Profit forecast and investment rating: We expect the company's EPS in 2018 and 2019 to be 0.90 yuan and 1.00 yuan respectively, maintaining the “buy” rating. Risk warning: policy regulation in Tier 1 and 2 cities continues, settlement falls short of expectations, etc.