The company announced the semi-annual report: ① 18H1: operating income of 2.97 billion yuan/ +33.61%, net profit of 130 million yuan/ -28.90%, net operating cash flow of 130 million yuan/ +138.86%, net operating cash flow of 1.36 billion yuan/ +122.26%; ② 18Q2: operating income of 1,922 million yuan/ +40.99%, net income of 92 million yuan/ -21.77%, net operating cash flow + 2.37% Also, Hunan overseas travel agencies boosted 18H1 revenue growth by 33.6%, and overall gross margin increased by 4.02 pct over the same period last year. ① The company's H1 revenue in 2018 was 2,966 billion yuan/ +33.61%, mainly due to the company's merger with Hunan overseas travel agencies in December 2017. The company holds 60% of Hunan's overseas shares. Its core business is domestic and outbound travel business, which can achieve synergistic effects such as drainage with the company's domestic layout of scenic spots such as Tongguanyao in Changsha. We expect that Hunan's overseas revenue and performance will be effectively boosted. The company's 18H1 gross margin increased 4.02pct year-on-year, mainly due to the increase in gross margin of the real estate business in Shanghai, Ningxia and Heilongjiang, and mergers and acquisitions outside Hunan; ② By business, commercial housing sales revenue was 1,831 billion yuan/ +8.92%, and the gross profit margin ratio was 42.55%/+11.08%, mainly driven by the company's real estate project revenue and gross margin growth in Shanghai, Ningxia and Heilongjiang regions. Other businesses had revenue of 1,135 billion yuan/ +110.60%, and gross profit margin of 10.92% /+10.41pct, mainly driven by Hunan overseas travel agencies. Expenses declined during the 18H1 period, and net profit after deducting non-return to the mother rose sharply year over year. 2018H1: ① Sales expense ratio: 7.28% /+0.72pct, mainly due to the company's enhanced marketing in 18H1; ② Management fee rate: 7.96% /-1.40pct, with good fee control; ③ Financial expense ratio: 10.07%/-2.07%, mainly due to 18H1 companies' exchange profit and loss of 15.59 million yuan/year-on-year increase of 21.96 million yuan, and interest income increase of 5.27 million yuan. The 18H1 interest expenditure amount was about $303 million, which was not much different from 17H1's of $294 million. ④ Non-main business: Investment income reached 224 million yuan, a year-on-year decrease of 19%, mainly due to a 27% year-on-year decrease in net profit of the Bank of Changsha in 18H1 (the company holds 9.4% of the shares of Bank of Changsha, which is its second largest shareholder, and has been included in long-term equity investment by equity law); non-operating income of 1.34 million yuan, mainly compensation and other benefits, with little change in value over year. Net profit of Yuimu was 130 million yuan, a year-on-year decrease of 28.90%, mainly due to the company's benefits from the increase in the fair value of investment real estate in 17H1, including 124 million yuan, which brought the 17H1 non-recurring profit and loss to 132 million yuan, while the absence of such income in H1 in 2018 reduced non-recurring profit and loss to 3.52 million yuan, thus causing the growth rate of net profit to decline. Excluding the impact of this change, the company's 18H1 net profit after deduction was about 130 million yuan, an increase of 139% over the previous year. The Tongguanyao Scenic Area officially opened during the summer season, construction on the west bank of the ancient town of Jiugan has been completed, and the construction of Xining Children's Dream Park is progressing steadily. The company's cultural tourism revenue is expected to be released quickly. ① Tongguanyao Scenic Area: The company's cultural tourism project No. 1, Tongguanyao in Changsha, officially opened on August 28 this year. Considering that the Tongguanyao project is located in the Changzhu Tan area, there is strong demand for leisure tours, and the combination of the rich business formats of the scenic area itself, such as tickets+hotel+dining+entertainment+store rent, etc., lays a solid foundation for the operating income of the scenic area, we expect the project to attract 3 million visitors (expected to reach 5 million during the mature period), and the net profit of the corresponding scenic area can reach about 300 million yuan, which is expected to significantly increase performance in the future. ② Jiu'An Ancient Town: According to the semi-annual report for '18, after the full opening of the streets on the east coast, the ocean show officially opened during the reporting period, and the west bank of Jiuzi Ancient Town has been fully completed. We believe that the completion of the construction of the east and west banks of the ancient town of Jiaogan is expected to prepare for the closure of the park. Expectations for overall ticket collection were strengthened in '19, which is beneficial to the release of the performance of the scenic area. ③ Xining Children's Dream Park: According to the semi-annual report, the construction progress of the project has been accelerated in H1 in '18, and is expected to be put into trial operation in 2019. After completion, it will become a new tourist and vacation landmark in the northwest, creating a season-free, dreamy family tourist resort for the entire five northwest provinces; ④ Korea's Fairview Mountain Resort: In '18, H1 was approved by the local provincial council, and preparations for commencement of construction are being carried out in full. Real estate projects focus on first-tier and hot cities to provide a stable cash flow guarantee strategic transformation. ① In 2018, H1's real estate business achieved a contracted sales area of 413,600 square meters, a sales amount of 4.739 billion yuan, a settlement area of 178,200 square meters, and a settlement amount of 1,831 billion yuan. Under the ever-stricter real estate regulation policy, the company seized the opportunity and launched a series of targeted marketing activities based on the seasonal and regional characteristics of the real estate industry. Traditional homes continued to sell steadily. ② The company added 1.2011,000 square meters of land per month within 17 years, and its land reserves reached 2.2462 million square meters by the end of 17. The sharp increase in land reserves laid a solid foundation for subsequent good performance. However, in the future, the company plans to focus on transformation and upgrading to accelerate the development of cultural tourism projects. Land reserve planning for new real estate projects is expected to be cautious, and the pace of follow-up will slow down somewhat. Investment advice: Give a buy-A investment rating. In 2018, the company's projects such as Jiuzi Ancient Town in Wuhu, Tongguanyao in Changsha, and Xining International Resort progressed steadily, and the company's “cultural tourism+finance” business is expected to enter a period of continuous harvest. The company's net profit for 2018-2020 is estimated to be 1,090/13.10/1,570 million yuan, corresponding to EPS of 0.57/0.69/0.83, and corresponding PE of 10.3x/8.6x/7.2x, respectively, with a target price of 7.02 yuan for 6 months. Risk warning: 1) The flow of visitors to the scenic area project falls short of expectations; 2) financial risk; 3) risk of overseas business; 4) risk of changes in real estate policy