The situation of repurchasing shares such as "incentives" and "listed companies are necessary to safeguard the value of the company and the rights and interests of shareholders".

With the change of accounting standards, the proportion of investment income increased, and non-net profit increased by 17% year-on-year. In the first quarter of 2019, the company's operating income was 173 million yuan, and the net profit belonging to shareholders of listed companies was 309 million yuan, down 92.53% and 22.32% respectively from the same period last year. Among them, the control of the company's return net profit is mainly due to the stabilizing effect of the company's investment income, but in terms of the change in the value of investment income, it is still down 38.90% compared with the same period last year. This is mainly due to the reduction of financial assets due to the withdrawal of the Chengding fund project in the same period last year. In addition, due to the company's implementation of the new financial instruments standards in 2019, the company reclassified its financial assets and realized a fair value change of 105 million yuan in profit and loss, further alleviating the decline in net profit belonging to shareholders of listed companies. The company realized 220 million yuan in non-net profit deducted from the parent, an increase of 16.95% over the same period last year.

The Yangtze River Delta reserves are expected to continue to grow, and high-margin projects enter the harvest period in the first quarter of 2019. The company's real estate sales revenue mainly comes from Luxiangyuan and Xinjiangwan City C4 projects, with a total of 1.75 million yuan in newly signed finance and 144.15 million yuan in carry-over sales. In addition, the company rented a total real estate area of 56021 square meters in the first quarter, with a total rental income of 18.34 million yuan. In terms of hand-held land storage, by the end of 2018, the company has a total land reserve of 530.3 million square meters. 1) the Yangtze River Delta reserve is expected to continue to grow in the future: Qingpu District is mainly composed of Zhuguang Road, Xujingbei, Zhujiajiao and other projects, covering a total area of 450,000 square meters, accounting for 8.49% of the total land storage. Zhujiajiao commercial housing project has the largest land area, with a total investment of 241700 square meters, with a total investment of 1.16 billion yuan, with an unsettled value of 8.12 billion yuan. Li Qiang, secretary of the Shanghai Municipal CPC Committee, asked the company to take the initiative to participate in the integration construction of the Yangtze River Delta, and the company's potential reserves are expected to continue to grow. 2) the high gross profit project Luxiangyuan will enter the market soon: the company's Huangpu Luxiangyuan commercial housing project plans to invest 9.89 billion yuan, with a total construction area of 300,000 square meters, with an average cost of only 32835 yuan / square meter. the estimated price is more than 150000 / square meter and the total value of goods is nearly 30 billion, which is one of the greatest potential projects to contribute to the company's performance.

The modification of articles of association and share buyback can be used for employee stock ownership and equity incentives to maintain the value of the company. The company issued a notice on June 5 to amend the articles of association. Among them, cases such as "using shares in employee stock ownership plans or equity incentives", "necessary for listed companies to safeguard corporate value and shareholders' rights and interests", "using shares to convert corporate bonds issued by listed companies into stocks" and so on, may contribute to the development of the company.

Investment suggestion: we believe that the integration of the Yangtze River Delta has become a national strategy, and the strength of the policy is expected to continue to exceed expectations. The Shanghai municipal government requires the Urban Investment Group, as the main force of urban operation, to actively participate in the construction of the new free trade zone and the integration of the Yangtze River Delta. The company may amend the articles of association for share buyback or help the development. In addition, the company's Yangtze River Delta and high gross profit Luxiang Garden project is about to enter the harvest period. We expect the company's net profit from 2019 to 2021 to be about 1.552 billion, 2.263 billion and 3.175 billion, corresponding to 0.61,0.89 and 1.26 yuan for EPS and 10.99X, 7.53X and 5.37X for PE. The company revalues RNAV per share at about 16.26 yuan and maintains a "buy" rating with a six-month target price of 13.0 yuan, which is equivalent to 20% of the RNAV discount.

Risk hint: the process of integration is not as expected, and the regulation policy is higher than expected.