Key points of investment: Stable performance, and exchange losses have a significant impact on deducting non-net profit. In 2015, it achieved operating income of 2,409 billion yuan (+13.4%), net profit to mother of 128 million yuan (+12.4%), and net profit after deducting non-net profit of 67 million yuan, a year-on-year decrease of 34.5%. Non-current profit and loss mainly consists of the disposal of the subsidiary's investment income of 0.1 billion yuan and the investment income of 40 million yuan from the sale of shares held in Huiquan Brewery. The share of the three rates increased by 7.6 percentage points to 21.6%, mainly due to the devaluation of RMB, net exchange losses of 136 million yuan, and financial expenses of 358 million yuan, which increased 142% year over year. This also largely affected the increase in the company's net profit over 15 years. By business, the real estate and international engineering contracting business accounted for 58% and 38% of the main business revenue in 2015, respectively, while the two accounted for 71% and 25% of gross profit, respectively. The real estate business is the main stable source of revenue and profit. Revenue of 1.39 billion yuan increased 70% year over year, gross profit of 540 million yuan increased 69% year over year, and advance payments of 870 million yuan increased 35% year over year. The gross profit margin of the real estate industry of 38.9% was basically the same as last year, and the gross profit margin of engineering contracts increased by 5 pc by 20.4%. The company is based on general contracting for construction projects, focuses on real estate development, and mainly has an export-oriented economy. International engineering contracting has certain advantages. It has been the “world's largest 250 international contractors” for 22 consecutive years. The gross margin of the international engineering contracting business reached 20.44% in 2015, which is at the advanced level of the industry. In 2015, there were 25 construction projects under construction, with a cumulative contract amount of 4.497 billion yuan. The international engineering contracting business is centered in Kenya and is actively expanding to neighboring countries such as Uganda, Tanzania, and Papua New Guinea. Of the 25 projects under construction: 12 in Kenya, 1 in the Congo (Brazzaville), 2 in Equatorial Guinea, Ethiopia, the Philippines, and Tanzania, 1 in Uganda, and 3 in Hong Kong. Most of these projects are distributed in East Africa, West Africa, and the Asia-Pacific region, and have ushered in “Belt and Road” strategic opportunities. However, they are also affected by the slowdown in international economic growth, the fall in oil prices in 15 years, and the slowdown in infrastructure investment growth in countries such as Africa and Southeast Asia. Geopolitical risks and exchange losses cannot be ignored. The real estate business has benefited from a recovery in the market, and the development value of Tongzhou Wuyi Garden is extremely prominent. Real estate projects are located in various cities such as Fujian, Beijing, Nanjing, Chongqing, and Yangzhou, as well as Hong Kong and Kenya. Currently, the planned construction area exceeds 3 million square meters, and the unfinished area is nearly 2 million square meters. The total number of projects in Hong Kong and Kenya is nearly 200,000 square meters. There was a major breakthrough in sales in places such as Nanjing and Hong Kong in 2015. The pre-sale and sales area of 211,000 square meters of commercial housing surged 181% over the same period last year. Among them, Nanjing Wuyi Mingshiyuan sold 88,000 square meters and the Chongqing project sold 28,800 square meters. With the exception of Beijing, domestic projects are mainly located in Fujian, Nanjing, and Yangzhou, where sales have picked up significantly over the past 15 years, and sales are expected to increase significantly in 2016. The biggest highlight is the Tongzhou project, which is very rare in terms of location and scale. It is located in the core area of Xincheng in Tongzhou District, close to Beijing's administrative sub-center. Currently, the four parks of Narcissus Garden, Peony Garden, Bauhinia Garden, and Yueji Garden have been developed around 600,000 square meters. The value of the remaining Wuyi Garden South Area projects to be developed is around 30 billion yuan. Construction of guaranteed housing has already started, and about 50% of the basement project volume has been completed by the end of 2015. The project has a total land area of 381,000 square meters, a construction area of 285,000 square meters, with a total construction area of 1.09 million square meters, including 516,000 square meters of residential buildings (including 451,000 square meters of commercial housing and 65,000 square meters of guaranteed housing), 71,000 square meters of commercial office, 16,000 square meters of commercial hotels, 18,000 square meters of supporting public buildings, 10,000 square meters of civil defense and garage ground entrances, etc., 50,000 square meters of nursing homes, and 21,000 square meters of childcare. As the planning adjustments are completed, construction of the project can finally be officially started, and its successive entry into the market will bring the company a very impressive profit. Raise capital through allotment of shares to mitigate high debt risks. The company's net assets were 1.23 billion yuan. As of the end of 2015, the real estate debt ratio was 86%, the net debt ratio was 325%, short-term book loans were 3.22 billion yuan, long-term loans were 2.14 billion yuan, and the debt burden was heavy. The monetary capital was 1.87 billion yuan, and the short-term debt gap was 1.86 billion yuan. In February 2016, 1,099 million yuan was raised through allotment of shares, and 110 million shares were actually issued at an issue price of 996 yuan/share, of which 37 million shares were subscribed by the majority shareholders. Assuming that the net capital raised of 1.07 billion yuan is used for debt repayment according to the purpose of the allotment statement, the balance ratio can drop to 75%, and the net debt ratio will be around 247%. In the short term, the company's loan interest rate has reached a maximum of 12%. Based on a 30% increase in the benchmark interest rate for 1-year loans, the company can save nearly 70 million yuan in financial expenses every year by raising capital to repay loans. In 2015, it also issued 490 million yuan of corporate bonds with a 7-year interest rate of 5.58%. Raising capital reduces debt risk and increases financial liquidity. It also helps promote the development of the company's international engineering contracting business and accelerate progress in Beijing's Wuyi Garden South District, creating a positive circular effect. The company's traditional business has a certain influence in the international market and has maintained steady development; the real estate business has significantly benefited from market recovery, and sales and settlement have ushered in a good window period. The Tongzhou project is about to enter the market and is expected to be an important support for performance in the next few years. Currently, the company's market value is only 8 billion yuan. We estimate its real estate business at RNAV20.8 yuan/share, and forecast the latest diluted EPS of 0.29/0.38/0.52 yuan in 16-18, corresponding to PE56/43/32 times, with a target price of 20.8 yuan for 6 months, with a “recommended” rating. Risk warning: The progress of the Tongzhou project falls short of expectations, high financial risk of debt, geopolitical risk of international contracting business, risk of exchange losses.