Business income continued to rise in 2018, and the contribution of the region outside Beijing was strengthened. The company's total revenue in 2018 was 2.234 billion yuan, an increase of 4.71 percent over the same period last year, of which real estate revenue was 1.739 billion yuan, an increase of 3.58 percent over the same period last year; revenue from new science and technology services was 412 million yuan, an increase of 9.78 percent over the same period last year, accounting for 18.55 percent, an increase of 0.86 percent over 2017; and cultural and media revenue was 72 million yuan, an increase of 4.95 percent over the same period last year. From the perspective of regional distribution of income, Beijing's operating income was 1.886 billion yuan, down 1.2 percent from the same period last year, accounting for 84.82 percent, or 5.08 percent lower than that in 2017; Tianjin contributed 113 million yuan in operating income, up 477.54 percent from the same period last year, and Shuozhou's operating income was 224 million yuan, up 14.92 percent from the same period last year.

Gross profit margin remains high and assets grow steadily. By the end of 2018, the company's gross profit margin was 64.55%, which was 64.55% higher than that of 18Q3, a year-on-year increase of 37.69%, a net profit of 397 million yuan, a decrease of 22.30%, and a net profit of 410 million yuan, down 19.40% and 0.37% per share, a decrease of 42.19%. The company's total assets reached 13.982 billion yuan, an increase of 23.52% over the same period last year. The net assets belonging to shareholders of listed companies were 6.589 billion yuan, an increase of 3.68% over the end of 2017. On May 10, 2018, the company set up a special asset support plan with an issuance quota of 1.8 billion yuan. On June 29, 2018, after being examined and approved by the board of directors, the subsidiary set up in Xiamen raised RMB 300 million by means of joint loans from several banks.

Promote the strategic transformation to the science and technology service industry. The company promotes the construction of the industrial pattern of science and technology service transformation, on the basis of the product system of "one main chain, multi-branches" and the science and technology service organization system of "region + enterprise group". Efforts will be made to create a new pattern of industrial development based on "science and technology space service system" and "science and technology development service system". Tianjin community opened smoothly and further promoted the science and technology incubation service platform; invested in the establishment of the electronic city Huaping Dongjiu (Ningbo) Asset Management Co., Ltd., and promoted the construction of science and technology financial service platform; science and technology public service platform and technology and culture integration service platform continue to expand.

We will steadily implement the construction of regional projects and constantly deepen the strategic layout of the country. In 2018, Electronic City Group steadily promoted key projects, including Electronic City. International Electronics headquarters Project, Electronic City. It Industrial Park Project, Electronic City. Digital new media innovation industry park project, electronic city. Lingkong Economic Innovation Industrial Base and other projects, covering Beijing, Tianjin, Xiamen, Kunming and other cities. In addition, on the basis of continuously promoting the projects in Beijing and North China, South China and Southwest China, the company has obtained the land use right at the core of Hongshan New Town, Xuanwu District, Nanjing City, Jiangsu Province, which is conducive to the layout of the project in East China.

Investment advice: "neutral". The company continues to promote the development strategy of "based on Beijing, radiating the whole country" and transform to the science and technology service industry. We estimate that the company's EPS will be 0.42 yuan per share in 2019, which will give the company a valuation of 10-12 times PE in 2019, corresponding to a market capitalization of about 48-5.7 billion yuan, a reasonable value range of 4.25-5.10 yuan, and a PEG of 0.69-0.83 in 2019. Risk hint: the company's real estate sales account for the main part of the income, and the lower-than-expected carry-over speed may lead to the company's lower-than-expected performance.