Dongbai Group issued an announcement: The company and JD Group recently signed a “Strategic Cooperation Framework Agreement”, and the two sides will commit to cooperation in the fields of commercial retail and warehousing and logistics. Complement the advantages with JD and collaborate on retail logistics strategies. This cooperation will be based on the strengths and resources of both parties in commercial retail, based on commercial entities and the Internet. Through the use of advanced technical means such as artificial intelligence, big data, and cloud computing, effective collaboration and integration between online and offline businesses will be realized. In order to further integrate the supply chain, the two sides will deepen cooperation in the construction of logistics facilities, strengthen collaboration on the strategic layout of logistics facilities, strengthen collaboration in logistics planning and technology, complement each other's strengths and jointly develop business, and accelerate the implementation of cooperative customized logistics facilities. The agreement is valid for 3 years. Promote logistics real estate business and contribute to new growth in the company's performance. This cooperation with JD in the field of logistics shows the company's confidence in the logistics real estate business. After 2 years of operation, the company's logistics real estate project will start contributing profits to the company starting in 2018. As of 2018H1, of the company's 7 existing warehousing and logistics projects, Tianjin Panzhuang, Foshan Leping, and Beijing Yizhuang Phase I projects have completed investment and entered the actual operation stage. The market space in this sector is large, and it is easy to build industry barriers. At the same time, marginal growth is promising. At the same time, projects in some regions have already achieved substantial business cooperation with JD. The signing of this agreement is expected to go one step further in the depth of cooperation. E-commerce helps retail development, and store earnings can be expected to recover: as online dividends gradually disappear, offline retail is picking up. In this context, the upgrade of Hall A and B of Dongbai Center, the company's main store, was completed, and the area was expanded to form a commercial complex. Hall C also opened on September 30. Benefiting from the opening of new stores and the impact of a low base, retail revenue is expected to grow rapidly this year. In the context of borderless retail, JD also attaches great importance to offline layout. Currently, JD Home and JD Five Star Electric have entered Dong100 stores. In the future, other business formats within the JD system are also expected to cooperate deeply with Dongbai. Investment advice. The company's logistics real estate business has entered a period of performance harvesting after two years of cultivation. In the future, as the focus of management, it will develop further rapidly, and the recent transfer of the Foshan project will contribute significant benefits. The retail business is expected to see a relatively rapid increase in revenue and profit this year due to store adjustments. The stock of the two commercial real estate projects has not yet been exhausted. The company is expected to achieve net profit of 339 million million/363 million yuan in 2018/2019, corresponding to a PE of 14.2x/13.2x. Risk warning: The industry is recovering slowly, the real estate market continues to fluctuate, and the progress of real estate projects falls short of expectations.