Key investment points: The company's 2016 semi-annual report showed revenue of 1.37 billion yuan during the period, an increase of 126.8% over the previous year. Net profit attributable to the parent company was 4.8 million yuan, an increase of 104% over the previous year. Basic earnings per share were 0.0033 yuan, with a weighted average return on net assets of 0.16%; the same period last year was -0.0829 yuan, -4.11%, respectively. Revenue increased significantly year-on-year. In the first half of the year, commercial real estate owned and operated by offsite replication companies in Hubei and Chengdu sold a total of 106,000 square meters, accounting for 64.4% of the full year of 2015; sales amount was 1.52 billion yuan. Revenue for the first half of the year was 1,372 million yuan and net profit was 4.782 million, up 126.8% and 104%, respectively. The sharp increase in the company's performance is mainly due to the increase in settlement resources during the period, and the increase in sales during the period will guarantee future revenue and profit. The company implements a strategy of “based in Wuhan and key layout”. On the one hand, as a leader in commercial real estate in Hubei, it continues to cultivate Wuhan and lay out Xiangyang and Jingzhou to form intra-provincial linkages and consolidate brand advantages; on the other hand, it expands key Tier 1 and 2 cities with potential and continues to lay out Nanjing and Chengdu. During the period, the company won a fan base project in Nanjing and is located in the core commercial area of Qinhuai District. Linked with the Gulou District project won in 2015, it is expected to become an important commercial real estate developer in Nanjing. The company added two new projects in Nanjing and Wuhan in the first half of the year, with an equity construction area of 263,000 square meters and a comprehensive floor price of 2,893 yuan. Future profit margins can be expected. Currently, the company has sufficient project reserves. There are 3 projects to be developed (2 in Nanjing and 1 in Wuhan), with a total of 971,000 square meters; 8 development projects (1 in Chengdu, 1 in Xiangyang, 1 in Jingzhou, and 5 in Wuhan), totaling 1,599 million square meters, with sales of 106,000 square meters in the first half of the year and 130,000 square meters completed, to guarantee the next 5.5 years of operation. In terms of ownership and operation, two new projects in Chengdu and Xiangyang were added during the period, totaling 130,000 square meters. The Chengdu Fanyue International Project is the company's first cross-regional commercial project. The company's unique “whole lease+retail” commercial real estate operation model has been successfully replicated from other locations, and is expected to continue to expand in the future. The Xiangyang Yuexing Project is the company's 7th home furnishing project. Cooperation within the province has helped the company further consolidate its dominant position in the Hubei home building materials market. The company currently owns and operates a total of 890,000 square meters, including 693,000 square meters in Wuhan, 57,000 square meters in Jingzhou, 50,000 square meters in Xiangyang, and 80,000 square meters in Chengdu. They are basically located in the city's important commercial areas and close to rail traffic. The rental rate is basically over 90%, leasing revenue in the first half of the year was 115 million, and the gross profit margin was 16.5%. The majority shareholders' support has been steady for expansion. After the partner countries started to power construction in June 2014, the company's expansion was accelerated through capital and project support, and continued during the period. In terms of capital: In April, the company obtained an entrustment loan of 2.5 billion dollars. The interest rate for the 1-3 year loan base did not rise by more than 30% and did not exceed the company's average financing cost; in June, the company completed a fixed increase of 5.64 yuan and raised 1.5 billion yuan, of which power construction subscribed 40% according to its shareholding ratio. In terms of projects, Power Construction has injected 26% of its shares in the Wuhan Changdong Project into the company. The project is located in the core area of Wuhan East Lake High-tech Zone. The floor price is only 1,862 yuan, and the total construction area is 640,000 square meters. Future investment returns can be expected. The company is making frequent moves to integrate external resources. In April, an agreement was signed with Hubei Electric Power Company No. 1 to cooperate in developing cultural and creative and innovative industrial parks, give full play to the advantages of commercial real estate development, enter high-margin cultural and creative industries, and cultivate new profit growth points. An agreement was signed with Guokai Hanfu in July. Guokai Hanfu provides financing channels and project resources, and the two sides jointly develop and operate high-quality commercial real estate projects. CDB Hanfu is an asset management company initiated by CDB, which specializes in providing capital and asset support to leading enterprises and local governments. The cooperation will accelerate the company's expansion, and it also indicates that the company's leading position in commercial real estate and development prospects are recognized. Diversified financing continued to advance, and the company's financial situation improved dramatically. With the support of major shareholders, the company achieved remarkable results in diversified financing in the first half of the year: completed a fixed increase of 1.5 billion yuan, saving 100 million yuan in financing costs per year based on 7% of comprehensive financing costs; obtained 2.5 billion entrustment loans from major shareholders, with interest not exceeding the company's average financing costs; 1.5 billion private targeted debt financing instruments were approved for registration; and proposed public issuance of no more than 1 billion corporate bonds. At the same time, it has also reached a strategic cooperation with China Development Bank Hanfu to further open up financing channels. Due to the long cycle of degeneration and return of commercial real estate, the financial pressure on commercial real estate developers is generally high. The company has accelerated its expansion, is deeply involved in Wuhan, and focuses on Tier 1 and 2, which has brought great financial pressure. Since 2013, there has been a continuous net outflow of cash from operating activities. With its excellent layout, mature product line and operating model, and high regional brand recognition, the company ensures that new projects can generate returns as scheduled. The net cash flow from operating activities in the current period was -210 million, and the net outflow was only 11% in the same period last year, the best level since 2013, indicating that as new projects gradually generate returns, the company's financial pressure is expected to ease. At the same time, benefiting from the smooth completion of fixed increases, a sharp increase in sales, and improvements in the company's solvency, the balance ratio at the end of the period was 74.8%, and the balance ratio after excluding accounts collected in advance was 73.7%, all of which were 8.2 points lower than at the end of last year. The “recommended” rating is expected to be the company's 2016-2018 EPS of 0.31, 0.49, and 0.74, respectively, and the corresponding PE is 19X, 12X, and 8X, respectively. The company's performance in the first half of the year increased dramatically, sales also achieved steady growth, and the annual performance is predictable. “Deeply cultivating Wuhan and focusing on layout” has achieved remarkable results. The joint layout of the two projects was completed in Nanjing, and the offsite replication of ownership operations was achieved in Chengdu. The current project reserves are abundant to meet sales and holding requirements for the next 5 years or more. The company has received continuous support from the majority shareholder Power Construction Group in terms of capital and projects, and there is strong expectation that high-quality projects will continue to be injected in the future. At the same time, the company has strong ability to integrate external resources: it cooperated with the Provincial Electric Power Company to enter into the construction and operation of a high-profit cultural and creative industrial park to cultivate new profit growth points; and reached a cooperation with Guokai Hanfu, further opening up projects and financing channels. Through diversified financing, the company reduced financing costs and optimized the financial structure; at the same time, new projects generated returns as scheduled, financial pressure was reduced, and debt repayment capacity improved. Give the company a “recommended” rating. Risk warning: The overall inventory of commercial real estate is high, and project sales are lower than expected.