The company reported for the third quarter of 2017 that its operating income was 4.04 billion, down 25% from the same period last year, and its net profit was 245 million, an increase of 198% EPS0.38 yuan over the same period last year.

There are challenges in de-chemical, the year of performance improvement: the main reasons for the decrease in income but increase in profits in the first three quarters are: 1. The scale of the company's settlement project is relatively small, mainly for the newly completed Shanghai mileage project and other projects at the end of the day; 2. The change in the structure of real estate income projects makes the business tax and additional fees drop by 49% compared with the same period last year. 3, the scale of projects under construction is larger than the same period, interest capitalization costs are increased, and financial expenses are reduced by 45% compared with the same period last year. With the rebound of net interest rate and the improvement of the performance of self-owned properties, the trend of improvement in the company's performance is expected to continue throughout the year. However, in the first three quarters, the company achieved sales of about 5.29 billion, and only achieved the annual target of 1/3. There is still great pressure on the sales task in the fourth quarter.

The willingness to replenish inventory has been strengthened, and the financial pressure has increased: the company has significantly increased the intensity of land acquisition, with a new land area of 8185,000 square meters in the first three quarters, with a floor area of 9077 million square meters, an increase of 1420% over the same period last year. Continuing the characteristics of actively expanding from equity acquisition channels last year, the company acquired the Huaji Jiangshan project in Boluo County, Huizhou and the second phase of urban renewal project in Baocheng District 26, Baoan District, Shenzhen in September. As the company's long-term and short-term borrowing increased significantly in the first three quarters, the net debt ratio and short-term debt pressure also increased. In addition, the inconsistency between sales rebates and operating expenses deserves further attention.

Entrusted with the management of major shareholder projects, three new investment projects have been added: the company signed an agreement with Huihai Real Estate to be responsible for the operation and management of the land development and construction of Shenzhen Shangsha City Renewal Project. The project is an old reform project under the control of the company's major shareholders, and the company's entrusted management of the project is expected to improve operating income and expand the scale of the company's trading project, which is in line with the company's strategy of "ploughing the city and multi-market linkage". The company's major shareholders have rich resources for old reform in Shenzhen, and we also look forward to further strengthening the resource potential in Shenzhen in this regard. Up to now, the company has implemented follow-up investment in all the newly acquired projects, and has completed 7 projects with good follow-up results. At present, the announcement continues to promote 3 new follow-up projects.

Profit forecast and investment rating: we expect the company's EPS from 2017 to 2018 to be 0.90 yuan and 1.03 yuan respectively, maintaining a "buy" rating.

Risk hints: the real estate industry is subject to downward regulation factors, regulation is stronger than expected, and so on.