The company contributed significantly to the profits of its real estate business in the first half of the year. 2020H1, the company achieved operating income of 2.978 billion yuan, an increase of 11.61% over the same period last year; realized return net profit of 422 million yuan (+ 3.5%), deducting non-net profit of 419 million yuan (+ 5.16%). For Q2 alone, the company achieved operating income of 2.305 billion yuan, an increase of 143.89% over the same period last year, a net profit of 367 million yuan, an increase of 105.00% over the same period last year, and a deduction of 362 million yuan for non-net profit, an increase of 113.82% over the same period last year. In the first half of the year, the company continued to cultivate Zhuhai, and steadily promoted the development and construction of Shanghai Qiantan, Sijing and Chongqing projects and promoted the injection of tax groups.

The company has won the bid for the Phoenix coastal plot, and the tourism consumption area has the potential for development. According to the company announcement, on September 7, 2020, Zhuhai Helian Real Estate Co., Ltd., a wholly owned company of the company, won the right to use state-owned construction land in Fenghuang Coast Unit, Sanya headquarters Economic and Central Business District, which was publicly sold by Sanya Natural Resources and Planning Bureau through public bidding. The total transaction price was 1.651 billion yuan. And the proportion of support is not less than 30%. The three plots correspond to a land area of 2190.93 hectares (retail commercial land with a volume ratio of ≤ 3.5), 8763.72 hectares (commercial and financial land with a volume ratio of ≤ 3.5) and 21998.14 hectares (retail commercial land with a volume ratio of ≤ 2.5). According to the Planning and Design Plan of Sanya headquarters Economic Zone and Central Business District, the Phoenix Coast Unit in Tianya District where the project is located is positioned as an area for the development of international free trade services and tourism consumption, which will include leisure, cultural and performing arts, boutique shopping and other functions. According to the limit calculation, the retail commercial land developed by the project can reach 62663.61 hectares, second only to Sanya International tax-free City, which has a commercial area of 72000 square meters, and is likely to become a first-class local commercial project in Sanya in the future.

The construction of coastal high-end tourism retail projects is expected to land duty-free operation on outlying islands. According to the announcement, the site is intended to be used for the construction of coastal high-end tourism retail projects. On August 19 this year, the results of the implementation of the new policy of duty-free shopping on Hainan outlying islands and the progress of related work were released at the press release. Chen Xi, director of the Department of Commerce of Hainan Province, said that Hainan will also strive to open three new duty-free shops in Sanya in 2020 (including Phoenix Airport Store and two intra-city stores). And will try to use competitive negotiation to select one enterprise from among the enterprises with the qualification of duty-free goods outside Hainan province. As the main operator of an outlying island duty-free shop in Sanya. We believe that Gree Real Estate will take the lead in landing the corresponding outlying island tax-free project in the urban area of Sanya with the two resources of Zhuhai tax-free development and high probability injection.

Profit forecast and investment advice: we are actively optimistic about the development prospects of Zhuhai duty-free follow-up in the Greater Bay area and Hainan Free Trade Port, but considering that Zhuhai duty-free injection has not yet been completed, do not consider this acquisition for the time being, and maintain the 2020-2022 homing net profit forecast of RMB 6173100,783 million, corresponding to the PE of 38-35-30, respectively, maintaining the "overweight" rating.