The company announced its mid-year report for the first half of '17. The company's revenue for the first half of '17 was 5.488 billion yuan, -5.4% year-on-year; net profit was 460 million yuan, +36.0% year-on-year, and EPS 0.49 yuan/share. Key investment points: The carry-over gross margin has increased dramatically, and the share of three fees has continued to decline. Revenue for the first half of '17 was 5.488 billion yuan, -5.4% year-on-year; net profit was 460 million yuan, +36.0% year-on-year. The sharp increase in net profit is mainly due to the sharp increase in carry-over gross margin and the continuous decline in three fees: gross profit margin of 27.6%, year-on-year +5.0 pc; net profit margin 8.4%, +2.6 pC; third fee accounts for 6.7%, -0.3 pc year on year, and has continued to decline since 15 years. Advance accounts were collected at 7.53 billion yuan, locking in results for the full year of '17. The average settlement price of the real estate business increased dramatically as scheduled, and profitability improved markedly. The company had a settlement area of 519,000 square meters (-24.6% year-on-year), settlement revenue of 4.84 billion yuan (-9.1%), average settlement price of 9332.5 yuan/square meter in 2016); sales area of 554,000 square meters (-0.9%), sales amount of 4.66 billion yuan (-18.1%), average sales price of 8411.5 yuan/square meter (10,443 yuan/square meter in 2016). The 2016 sales project has gradually entered the settlement period. It is expected that the gross margin for the full year of '17 will remain high in the first half of the year; the average sales price declined in the first half of '17, and the gross margin in '18 is expected to retract moderately. Sales revenue for 2017 is expected to be 124.2 to 12.98 billion yuan, an increase of 10-15% over the previous year. By the end of June '17, the company held 6.422,000 square meters of land to be developed in Wuhan and other cities in Hubei, and had a sales stock of about 441,000 square meters of owned property; in other regions, the land area to be developed in Beijing was 66,000 square meters, and the land area to be developed in Australia was 88,000 square meters. The plan to increase holdings was successfully completed, providing a safety cushion for existing stock prices. Based on confidence in the company's future development, the controlling shareholder Fuxing Group plans to increase its holdings of the company's shares by about 47 million shares through methods permitted by the Shenzhen Stock Exchange within eight months from October 24, 2016, accounting for 4.95% of the current share capital. From October 28 to December 30, 2016, the Group increased its holdings by 33.394 million shares, accounting for 3.52%, with an average increase of 12.38 yuan/share; from January 23 to April 18, '17, it once again increased its holdings by 15.176,000 shares, accounting for 1.60%, with an average increase of 12.33 yuan/share. After completing the holdings increase plan, the Group held 24.64% of the shares and promised not to reduce its holdings for six months from the date the increase plan was completed (10/18/17). The second-tier representative city, Wuhan, has taken root in the short term, and sales volume and price have declined due to increased policies and steady volume contraction in market prices. In the medium to long term, it will continue to benefit from the spillover of first-tier demand, good development prospects of regional centers, and increased demand brought about by strong population agglomeration capacity. Wuhan is the leader, has abundant reserves of ultra-low cost land, outstanding future development value, and a great competitive advantage. The latest RNAV is 22.3 yuan/share. The Group's two increases in holdings at an average price of 12.33 and 12.38 yuan/share, providing a sufficient margin of safety. The estimated operating income for 17-19 is 114, 128, and 13.9 billion yuan, corresponding to growth rates of 8%, 12%, and 9%; EPS is 0.84, 1.00, and 1.14 yuan, corresponding to PE 16, 13, and 12 times. The target price for June-December is 16.0 yuan, corresponding to 19 times PE in '17, maintaining the “recommended” rating. Risk warning: Continued policy tightening, sales in the second half of the year fell short of expectations, smart community promotion and transformation fell short of expectations, etc.