Event: October 24, the company announced that the company announced three quarterly reports: the company's operating income in the third quarter was 450 million yuan, down 53.38% from the same period last year (down 39.91% from the previous value); the attributable net profit was 444 million yuan, turning losses into profits (previous value-123.49%); EPS was 0.51.

Zhejiang's veteran real estate enterprises have turned their losses into profits: 1) one of Zhejiang's veteran real estate development enterprises: since its listing in 1997, the company has been deeply ploughing the fields of construction and real estate development. it is one of the established real estate development enterprises in Zhejiang Province and formally proposed to withdraw from the real estate industry in August 15. 2) the turnround from loss to profit is due to the increase in investment income: by the end of the third quarterly report of 16 years, the company's operating income was 450 million yuan, down 53.38% from the same period last year (down 39.91% from the previous value), and the attributable net profit was 444 million yuan, turning losses into profits (previous value-123.49%). It is due to the substantial increase in investment income. 3) ROE has increased, and the gross profit margin on sales is basically flat: during the reporting period, the company's ROE was 25.21%, an increase of 30.60 pc; sales gross profit margin of 27.28% over the same period last year, which is basically the same as the same period last year.

Retired property, another film and television rookie: 1) divestiture of inefficient assets, a new starting point of industrial transformation: in August 15, the company formally put forward the strategic decision to withdraw from the real estate industry within three years. During the reporting period, the company successively sold 100% equity in Tonghe Real Estate, 100% equity in Zhuzhu Industries, 44.45% equity in Guangsha Fangkai, etc. At present, the stock reserve projects are mainly concentrated in Tiandu Industrial (with a total land area of 2036,000 square meters) and Guangsha (Nanjing) Real Estate Investment Industrial Guangsha (with a total salable area of 406,000 square meters). 2) enter the film and television industry and build new growth points: the company has taken the first step in the transformation since the asset exchange into Futian Film and Television in the past 14 years, and has successively set up a film and television project fund (121 million yuan in size, of which Guangsha Media subscribed 20 million yuan, accounting for 16.53%), M & A fund (37.5 million yuan raised, Guangsha plans to subscribe 27.5 million yuan, accounting for 73.33% of the total) and increased funding through M & A funds. By subscribing for the share of Shengshi Yunjin Fund to increase investment in road painting film and television, the purpose is to lay out the film industry in advance, to hold and acquire road painting film and television when the conditions are ripe, and to deepen the company's horizontal layout in the field of film, television, culture and media. create new profit growth points.

Lou Zhongfu, the actual controller, returned, and the uncertainty was initially lifted: Lou Zhongfu currently controls Guangsha Holdings, holds 45.12% of the company directly and indirectly, and is still the actual controller of the company and honorary chairman of the board of directors. it still has a significant influence on the company's management and development strategy. 1) in December 14, the Chairman assisted the Central Commission for discipline Inspection in its investigation: according to public information (source Xinhua News Agency, etc.) Lou Zhongfu began to assist the Central Commission for discipline Inspection in its investigation at the end of 14 and was summoned to testify at the trial of the Ling Jihua case. The survey period has a certain adverse impact on corporate refinancing and debt credit; the financing channel of the company is relatively simple in recent years, and the company's net debt ratio is as low as 21.88% by the end of the reporting period. 2) at present, the company has returned to its place of residence, and the uncertainty has been initially lifted: the company is currently in a critical period of transformation, and the chairman still plays an important role in the follow-up strategic planning. Lou Zhongfu's current assistance in investigating the incident has come to an end for the time being. the uncertainty about the company's operation has been initially lifted, and it is expected to open up open market financing channels in the future, and the direction of exploring emerging business will also be clearer.

Explore the new sailing of large sports and Guangsha sports: 1) invest in the establishment of Guangsha sports: on September 27, the company announced that it plans to invest in the establishment of Zhejiang Guangsha Sports Culture Co., Ltd. in Xihu District, Hangzhou, with a registered capital of 10 million yuan, mainly engaged in sports event operation; sports venue operation; sports consulting and marketing 2) large shareholders inject their CBA club operating assets: after the establishment of Guangsha Sports, the majority shareholder Guangsha Holdings entrusts all the commercial operation rights of Guangsha Basketball Club, such as team naming rights, ticketing, player commercial brokerage and derivative development, to Guangsha Sports for in-depth development. Guangsha Basketball Club only retains specific daily basketball team affairs such as team management and CBA match arrangements to solve the problem of competition in the same industry.

Investment suggestion: the company is a veteran Zhejiang housing enterprise, which has been deeply ploughing the field of construction and real estate development. in the second half of 15 years, the company formally proposed to withdraw from the real estate industry and fired the first shot of the exit plan by selling 100% stake in Tonghe real estate. And through the placement of Futian Film and Television into the film and television cultural industry, over the past 16 years, he has successively set up a film and television project fund, participated in subscribing for the M & A fund to increase capital in road painting, film and television, laid out the film industry, and deepened the horizontal layout in the field of film, television, culture and media of the company. actively explore new profit growth points As the company gradually strips off inefficient real estate projects and increases the development layout of the whole industry chain of film and television culture, the company is expected to achieve great-leap-forward development on the road of transformation in the future. We expect the company's EPS for 16-18 years to be 0.48,0.56 and 0.67 respectively, corresponding to PE multiples of 14.9X, 12.8X and 10.8X, with a "Buy-A" rating for the first time and a six-month target price of 9.18RMB.

Risk tips: transition uncertainty risk, performance decline