The company released its 2018 semi-annual report on August 23. During the reporting period, we achieved operating income of 7.622 billion yuan, up 13.91% year on year; total profit of 394 million yuan, up 9.8% year on year; owned net profit of 128 million yuan, down 3.64% year on year, after deducting 120 million yuan in non-net profit, down 5.09% year on year. In the first half of 2018, the company had diluted earnings per share of 0.81 yuan, return on net assets of 5.33%; operating cash flow per share was 5.64 yuan. Brief reviews and investment recommendations. 1. Revenue for the first half of 2018 was 7.622 billion yuan, up 13.91% year on year, and the comprehensive gross profit margin was 22.81%, an increase of 2.25 percentage points. Among them, revenue for the first and second quarters increased 18.9% and 9.66% respectively to 3.66 billion yuan and 3.96 billion yuan, and gross margin increased 1.47 and 2.9 percentage points, respectively. By business type, in the first half of the year, shopping center revenue increased 7.83% year on year to 4,027 billion yuan, gross margin increased 1.56 pct year on year; large integrated store revenue increased 17.64% year on year to 2,122 billion yuan, gross margin increased 2.09 pct to 27.36% year on year; supermarket chain revenue grew faster, up 27.08% year on year to 1,219 billion yuan, gross margin increased 0.84 pct to 19.59% year on year; real estate revenue increased 29.17% year on year to 188 million yuan, gross margin increased 16.37 pct to 34.1% year on year. In the first half of 2018, the company continued to acquire 41% of Xining Department Store's shares. After the acquisition was completed, the shareholding ratio exceeded 90%. It expanded the remote market through low-cost acquisitions, and steadily promoted China's Samsung strategy. During the reporting period, the company added 1 shopping center and 2 supermarket chains. By the end of June, the company had 137 stores, including 39 shopping malls (department stores), 3 large integrated stores, 75 supermarket chains and 20 other business divisions. 2. The sales management expense ratio in the first half of the year was 13.77%, an increase of 2.2 percentage points over the previous year, mainly due to the addition of new stores, which led to an increase in sales expenses and management expenses. Among them, the sales expense ratio was 4.43%, an increase of 0.75 percentage points over the previous year, mainly due to the increase in staff costs and renovation costs for newly opened stores; the management expense ratio was 9.34%, an increase of 1.45 percentage points over the previous year, mainly due to increased depreciation and amortization expenses. Due to the increase in bank loans, financial expenses increased by 54.65 million yuan to 219 million yuan in the first half of the year, and the fee ratio increased by 0.42 percentage points to 2.87%. The overall cost rate for the period was 16.65%, an increase of 2.61 percentage points over the previous year. 3. Improved gross margin offset rising consumer usage rates, and operating profit and net profit increased by 9.77% and 8.63%, respectively. The effective tax rate increased by 0.78 percentage points to 27.33%, minority shareholders' profit and loss increased by 27.58 million yuan. Ultimately, net profit attributable decreased by 3.64% to 128 million yuan, and net profit after deducting non-net profit decreased by 5.09% to 120 million yuan over the same period last year. We estimate that excluding asset impairment losses, investment income, and non-operating income and expenditure, total operating profit increased by 4% in the first half of the year, with increases of 14% and -3% in the first and second quarters respectively. Among the major subsidiaries, Eurasia Store's profit grew steadily, with net profit rising 6.6% to 175 million yuan in the first half of the year, accounting for 42% of the company's net profit (including minority shareholders' profit and loss); Eurasia Auto 100, Tonghua Shopping Center, Daguanyuan Real Estate, Hexing Industrial, Tongliao Real Estate, Fuli Real Estate, Jilin Eurasia, and Siping Eurasia Trading all achieved net profit of more than 9 million yuan, contributing about 73% to net profit. Judgment of the company: (1) Sufficient defense: The business area is Changchun and other second-tier and third-tier cities in Jilin Province and low-cost (equity acquisitions) entering cities such as Shenyang, Jinan, and Zhengzhou. It is less affected by macroeconomic fluctuations and e-commerce, and has monopoly and brand effects within the province; it has 39 department stores, 3 large shopping malls and 75 supermarket stores, with a high value property network. (2) Potential high growth: Reserve projects are abundant and investment costs are low; as Little Samsung's strategic pattern takes shape, it is expected to expand strategically to China and Samsung, focusing on the Central Plains region. (3) The increase in executive holdings drives common interests and has an excellent dividend tradition: the chairman and executives of the company have continued to increase their holdings in the company since 2009. Up to now, the total shareholding ratio of executives is about 2.8%. Among them, Chairman Cao Heping increased his holdings to 2.14% in 1Q18 and then increased his holdings to 2.23% in 2Q18; the cumulative dividend since the company went public was 788 million yuan (dividend rate 29%), and the annual cash dividend since 2013 has exceeded 50 million yuan, providing a stable return on investment. (4) Various valuation indicators are low in the industry, and they all have a high margin of safety from the perspective of the secondary market and industrial capital. The current market value of 3.2 billion yuan corresponds to the estimated 2018 revenue of 15.4 billion yuan and net profit of 312 million yuan. PS is only 0.21 times and PE is only 10.2 times, all at a low level in the industry. Update profit forecasts. Net profit for 2018-2020 is expected to be 312 million yuan, 334 million yuan, and 344 million yuan respectively, up 2.3%, 7.1%, 2.9% year-on-year, and EPS 1.96 yuan, 2.1 yuan, and 2.16 yuan, respectively; considering the company's higher revaluation value, 15-18 times PE in 2018 (corresponding PS is 0.3-0.36 times), corresponding to a reasonable value range of 29.4-35.3 yuan, is given an investment rating of “superior to the market”. Risk warning: the risk of lengthening the incubation period of epitaxial expansion (mainly across provinces); uncertainty about real estate sales confirmation.