Events. The company publishes its 2018 semi-annual report. During the reporting period, the company realized operating income of 5.47 billion yuan, a decrease of 30.34% over the same period last year; net profit belonging to shareholders of listed companies was 638 million yuan, an increase of 2.36% over the same period last year; and fully diluted earnings per share was 0.19 yuan.

In the first half of 2018, due to the impact of the real estate project settlement cycle, the company's revenue decreased by 30.34% compared with the same period last year; however, due to the change in the settlement project structure, the net profit belonging to the parent company increased by 2.36% year-on-year. According to the company's 2018 semi-annual report, at present, the company's total land reserve for development projects is 8.4506 million square meters. The company holds a property area of more than 1.72 million square meters, of which 1.2 million are located in the core area of the Asian Olympic Games in Beijing. At present, the total area of exhibition and hotel projects entrusted by Beichen Convention and Exhibition Group is 2.58 million square meters. In the first half of the year, in terms of property development, the company started and resumed construction with an area of 674.2 million square meters and a completed area of 671600 square meters. During the reporting period, the company added 2585 million square meters of real estate reserves; the new construction area was 140.65 million square meters, up 60.30 percent from the same period last year; the sales area was 870 million square meters, up 72.99 percent from the same period last year; and sales were 14.75 billion yuan, up 58.45 percent from the same period last year. In terms of investment properties (including hotels), the company's operating income of investment properties (including hotels) reached 1.274384 billion yuan in the first half of the year, up 3.20% from the same period last year. During the reporting period, Beichen Convention and Exhibition Group successfully signed 5 entrusted management projects and 5 consulting projects.

In April 2018, the company won a 257,000 square meter residential land in Hangzhou. The company's semi-annual report of 2018 reveals that in the second half of 2018, the company expects to achieve a new construction area of 79.35 million square meters, a resumption area of 647.84 million square meters, and a completed area of 1.0084 million square meters. Under the influence of the real estate regulation and control policy, the company strives to achieve 6745,000 square meters of sales in the second half of 2018, with a contract amount of 9.249 billion yuan (including parking spaces).

Investment advice. Create a first-class composite real estate and exhibition brand, "better than the market" rating. The company's projects are concentrated in Beijing and Changsha and are involved in development, commercial and investment properties. The company's Beijing project precipitation value is high, the convention and exhibition business is the national leader, is transforming to the upstream high-profit business. We estimate that the EPS of the company from 2018 to 2019 is 0.43 yuan and 0.53 yuan respectively, and the corresponding RNAV is 11.83 yuan. Considering the company's active transformation of innovative businesses such as "mice + Internet", healthy pension industry, and cultural and creative industries, with excellent assets, the company was given a "better than the market" rating of 13 times PE and 0.6 times RNAV in 2018, with a corresponding reasonable value range of 5.59 yuan to 7.10 yuan.

Risk hint: the company faces the risk of substandard sales and downward sales price, as well as the risk of unsmooth expansion of the convention and exhibition industry.