Incident Jindi Commercial Real Estate announced its 2018 semi-annual results: the company achieved operating income of 1,727 billion yuan in the first half of 2018, an increase of 40% over the previous year; net profit attributable to shareholders of the parent company was 599 million yuan, an increase of 41% over the previous year, and basic earnings per share of 0.0377 yuan. The carry-over of reviews has accelerated, and performance has increased dramatically. The company's revenue for the first half of 2018 was 1,727 billion yuan, an increase of 40% over the previous year, of which property development revenue accounted for 77%. Excluding the impact of changes in financial reporting standards, the company's total revenue increased by 84.7 million yuan, mainly due to an increase in the company's rent and property management fee income of 38.3 million yuan, and an increase in microfinance interest income of 39.1 million yuan. In the first half of 2018, net profit attributable to shareholders of the parent company was 599 million yuan, an increase of 41% over the previous year, mainly due to accelerated carry-over and an increase in gross profit. The company's gross margin remained at a high level of 41%, up 4 percentage points from the end of 2017. Land acquisition is active, and sales are waiting to be released. The company's sales volume in the first half of the year was 15.97 billion yuan, a year-on-year decrease of 29%; the sales area was 736,500 square meters, a year-on-year decrease of 38%. There was little saleable value in the first half of the year, compounded by delays in pre-sales of some properties, which led to a decline in the company's sales scale. In July, the company's monthly sales amount reached 4.34 billion yuan, an increase of 44% over the previous year. The total saleable value is expected to increase in the second half of the year, and sales improvements can be expected. The company added 8 new projects in the first half of the year, with a total planned construction area of 941,000 square meters, a total acquisition price of 9.572 billion yuan, and an average equity cost of 10,200 yuan/square meter. As of the end of June 2018, the company's cumulative land reserves reached 13.42 million square meters, an increase of 11% over the previous year, and a layout in more than 20 cities. Looking at the distribution of urban energy levels, first-tier cities account for about 21.3% of land reserves. The level of leverage is steady, and financing costs remain low. The company's total bank and other loans in the first half of the year were $1,986 billion, with annual interest rates in the range of 3.0% to 4.3%. The company's net debt ratio was 40%, up 17 percentage points from the end of 2017, but the overall level remained low. The owned property is located in a central location, and the rent is considerable. The investment properties owned by the company are located in the core area of the core city, and the high rental rate increases the company's rent scale. In the first half of 2018, the rental rate of Shenzhen Weixin Software Technology Park Phase 1 and 2, Beijing Sohu Network Building, and Shanghai No. 8 Bridge project all reached 100%. Currently, the commercial development projects are mainly located in five new business districts in cities such as Suzhou, Nanjing, Shanghai, and Shenzhen. The rental revenue of the commercial real estate sector is expected to exceed 1 billion yuan after completion. Investment suggestion: Jindi commercial land acquisition outlook, focusing on core Tier 1 and 2 cities. Land reserves are abundant and costs are low. Currently, the land reserve scale is close to 14 million square meters. The company's sales growth is expected to accelerate due to the promotion structure. At the same time, the company also holds a large number of high-quality properties in core cities, and also has a large number of properties under construction. Rental income will continue to rise in the future. We expect the company's EPS in 2018-2020 to be 0.19, 0.25, and 0.32 yuan respectively, and the corresponding PE is 3.4, 2.6, and 2.1 times, respectively. Risk warning: industry sales fluctuations; business risks due to policy adjustments (shed reform, regulation, tax policies, etc.); changes in the financing environment (mortgages, development loans, interest rate adjustments, etc.); business operation risks (personnel changes, construction, land acquisition, etc.); exchange rate fluctuation risk.