Compared with the scarcity of assets held by the company, the company adheres to the bottom line of core asset operation and financial investment, the strategic determination not to expand blindly, and the financial security and high dividend ratio brought about by this strategic determination may be more important. This strategic focus also makes the company highly similar to REITs in terms of operational stability, asset and income structure, dividend intensity, financial security and so on. We can refer to the valuation level of REITs. Referring to the current P / available allocation amount of REITs, and considering the valuation result of DDM model, we give the company a target price of 18 yuan per share, covering it for the first time and giving it a "buy" rating.

Scarce commercial assets, scarce strategic focus. The International Trade Center jointly owned by the company and its controlling shareholders is a scarce high-end commercial complex in the CBD region of Beijing. However, we believe that what is more scarce than the company's operating assets is the company's adherence to the bottom line of core asset operation and financial investment, its strategic determination not to expand blindly, and the cash accumulation and high dividend ratio brought about by this strategic determination. As of the first half of 2022, the company had 2.672 billion yuan in cash on hand, covering 1.25 times of the current interest liabilities. In 2021, the company paid out a total cash dividend of 604 million yuan, with a dividend ratio of 59%. According to the closing price by the end of 2021, the company's dividend yield reached 4.2%.

Shopping malls drive revenue growth and hotel apartments unleash future potential. In 2021, the company's operating income was 3.586 billion yuan, an increase of 15.8% over the same period last year. Historically, the company's revenue growth is mainly driven by the increase in the average rent of shopping malls, which has grown at an annualized compound rate of 21.8% in the past five years. In the future, with the impact of repeated local epidemics gradually weakening, hotel operations will return to normal; small apartments of ITC apartments will be rented one after another, driving up the average rent and rental rate of apartments. Income from hotels and ITC apartments is expected to become a new source of revenue growth for the company.

The cost is relatively rigid, and revenue growth leads to the improvement of profitability. For the operation and management of holding commercial properties, all the costs of the company are relatively rigid, and the company's revenue growth in history has brought about an improvement in profitability. In 2021, the company's gross profit margin was 55.7%, an increase of 2.2 percentage points over the same period last year, and maintained growth for five consecutive years; net profit rate was 28.5%, an increase of 1.9 percentage points over the same period last year; and three rates were 8.3%, down 0.8 percentage points from the same period last year. In the future, with the growth of operating income, the company's profitability is expected to continue to improve.

A new perspective of valuation, self-discipline quasi-REITs. We believe that the similarity between the company and the property right REITs is high, and it is comparable: 1) the operational stability is similar. The company has a strong strategy and has never disposed of assets or invested and expanded blindly in history. After the completion of the renovation and upgrading of the ITC apartment, the operational stability of the ITC is similar to that of the current property rights REITs. 2) the asset structure and income structure are similar. The company's assets are mainly real estate, which accounts for 80% of the company's real estate rental income in 2021, which is similar to the property rights REITs, while Huaan Zhangjiang Everbright REIT accounts for 87% of the rental income in the same period. 3) the intensity of dividend is similar. In 2021, the company plans to pay a dividend of 600 million yuan, with a dividend intensity of 59% and a dividend yield of 4.2%, which is higher than the current cash distribution rate of REITs. 4) the financial security is similar. At present, the asset-liability ratio of public REITs in China shall not exceed 40%. By the end of the first half of 2022, the asset-liability ratio of the company was 29.9%, which meets the requirements of REITs.

Risk factors: repeated epidemics in some areas in the future will lead to further rent reduction for shopping centers and office tenants, difficulties in hotel operation, and increased risk that business income will be affected; the macroeconomic growth rate will slow down, and it will be difficult for the company's properties to attract investment, the risk of operating less than expected.

Earnings forecast, valuation and rating: considering the high similarity between the company and REITs, we consider that the multiple of the company's share price to the cash dividend (P / D) is comparable to the multiple of the REITs price relative to the amount available for allocation (P / available amount). We expect the dividend per share of the company's 2022E/23E to be 0.66 REITs,P/ 0.73 yuan. at present, the multiple of the amount available for distribution in the equity category is generally between 28.6 and 36.6 times, but considering the rigid dividend requirement of REITs, we give the company a multiple of 28 times Pmax, corresponding to the target price of 18.4 yuan per share. The development and construction of the international trade center and the renovation and upgrading of the international trade apartment have been completed, the company has no plans for major capital expenditure in the short term, and the company is expected to maintain a dividend of 60% in the future. according to the DDM valuation model, the reasonable share price of the company is 17.86 yuan per share. Considering the above two valuation methods, we give the company a target price of 18 yuan per share, covering it for the first time and giving it a "buy" rating.