Events. The company publishes its 2018 annual report. During the reporting period, the company realized operating income of 2.761 billion yuan, an increase of 64.98% over the same period last year; net profit belonging to shareholders of listed companies was 977 million yuan, an increase of 32.50% over the same period last year; and fully diluted earnings per share was 0.87 yuan. The company plans to pay a cash dividend of 3.00 yuan (including tax) to all shareholders for every 10 shares in 2018.

In 2018, driven by the increase in real estate sales revenue, the company's revenue increased by 64.98%; in the same period, the company's low gross profit margin on real estate sales reduced the increase in net profit to 32.5%. According to the company's 2018 annual report: in 2018, the company's main business was divided by main products, the company's real estate sales revenue reached 1.203 billion yuan, an increase of 317.08% over the same period last year; the company's real estate leasing revenue reached 1.394 billion yuan, an increase of 13.34% over the same period last year; and the company's hotel apartment service realized business income of 158 million yuan, an increase of 5.09% over the same period last year. In 2018, the company's key tasks made good progress: at the end of the reporting period, 90% of the main structure of the S11 residential project Biyunzun residence was completed, and 85% of the superstructure construction of the eastern, southern and northern areas of the new material innovation base of the future industrial park in the northern suburbs was completed. By the end of 2018, all kinds of operating properties held by the company reached 235.4 million square meters, with an overall rental rate of 82.14% (excluding hotels). At the end of the reporting period, the Lingang Biyun 10 project has opened with a housing removal rate of 60%, with a cumulative collection of 1.811 billion yuan (including deposit). By the end of 2018, the brand of "Biyun Garden Service apartment" created by the company has reached 4 self-operated plus entrusted management stores, with a total operation of 1338 sets, with an average annual occupancy rate of 70%.

In March 2019, the company plans to contribute 400 million yuan as a limited partner to participate in the establishment of Shanghai Pudong Science and Technology Innovation Investment Fund.

According to the company's 2019 business plan disclosed in the 2018 annual report, in 2019, the company strives to achieve substantial growth in operating income, net profit and other indicators compared with the same period last year. The company cooperates with the preparatory work for the establishment of the Pudong Branch Creative Mother Fund and strives to complete the filing in April. Take the lead in setting up a special sub-fund for intelligent manufacturing with a total size of about 2 billion yuan to implement direct investment in high-quality industrial projects that have been reserved.

Investment advice. Benefiting from the reform of state-owned assets and the construction of free trade zones, the rating is "better than that of big cities". The company is mainly engaged in the development, rental and sale of industrial real estate and park in Shanghai Jinqiao Export processing Zone. We believe that the company's rental revenue is expected to maintain a steady growth of 10% a year in the future. The construction of the main structure of Biyun Zun residence (S11 project) has been completed by 90%, and the sales of Biyun 10 in Hong Kong are good. We believe that the construction of the Shanghai Free Trade Zone is expected to bring a revaluation of the company's land value, and the company's state-owned assets reform is expected to promote the company's further development in the future. We estimate that the EPS of the company in 2019 and 2020 will be 1.10 and 1.22 yuan respectively. According to the current dynamic PE valuation of the target of Shanghai Free Trade Zone, the company is given 17-22 times PE in 2019, and the corresponding reasonable value range is 18.7-24.2 yuan, maintaining the company's "better than the market" rating.

Risk hint: the company's rental and sale business faces the risk of raising interest rates and policy regulation, as well as the risk of economic downturn.