Community service operator Color Life Service announced on Friday that it has reached a share subscription agreement with JD and 360 and obtained a total strategic investment of HK$490 million. It is expected to strengthen the development of value-added services (logistics, commerce, technology, financing, etc.) and community safety technology applications in the future. Since the share subscription agreement is currently awaiting approval from the Stock Exchange and the special shareholders' meeting, and is expected to be completed by the end of August this year, we currently maintain the company's net profit forecasts for 2019-2021 at $0.45 (up 18% year on year), 0.55 yuan (up 22% year over year) and 0.64 (up 16% year over year), and maintain a target price of HK$6.5, corresponding to 12 times 19-year PE and 10 times 20-year PE, based on 19.3% upward space. According to the company's announcement, JD, as a leading e-commerce company and retail infrastructure service provider in China, will now spend a total of HK$370 million to subscribe for 71.15 million new shares at the subscription price of HK$5.22 per share (about 4.22% off of HK$5.45 per share from the latest closing price), accounting for about 5.36% of the company's existing issued shares or about 5.00% of the company's issued share capital after final expansion. The shares are issued under a general license and subject to approval by the Stock Exchange, so that the two parties can provide richer products and services to the Lottery Online Platform, and the two parties will be able to provide richer products and services to the Lottery Online Platform. Further cooperation is being carried out in science and technology. Meanwhile, 360, as the largest Internet and mobile technology provider in China, will now spend HK$120 million to subscribe for 22.96 million new shares at the same subscription price of HK$5.22 per share, accounting for about 1.73% of the company's existing issued shares or about 1.61% of the company's issued share capital after final expansion. The shares are subject to independent shareholders' consent at the Extraordinary General Meeting of Shareholders and approval by the Stock Exchange. Prior to that, 360 already held a total of 20.5 million shares of Color Life, accounting for about 1.54% of the company's current issued shares. This investment will help further develop community safety technology applications. The share subscription agreement is expected to be completed by the end of August. Based on future cooperation with JD and 360 in various fields, we look forward to Color Life further enriching its product and service portfolio to accelerate the development of value-added services, while establishing and consolidating competitive advantages in market expansion by improving service quality. As the largest property management service provider at present, the total service area of the Color Life platform increased 25% year on year to 1.1 billion square meters at the end of 2018, including 550 million square meters of contract management area (27% increase year on year) and 570 million square meters of cooperation and alliance area (22% increase year on year), thus providing a sufficient user base for the development of value-added services. Specifically, value-added services contributed 30% of gross profit in 2018, and is expected to further increase to 35% in the future; at the same time, the gross margin of value-added services increased sharply by 13.7 percentage points to 95.7% in 2018, and is expected to remain high thereafter. Considering that the company maintains a cautious attitude towards mergers and acquisitions, we expect that in the future, the company will mainly expand its management scale through endogenous growth and explore the mid-tier market with cost-effective service quality. Furthermore, the company's reserve area reached 190 million square meters at the end of 2018, which can guarantee steady growth in the scale of management for the next 3-4 years. Looking ahead to the interim report, we expect the company's net profit for the first half of '19 to increase by about 20% year-on-year from 175 million yuan in the first half of '18, and the consolidated gross margin for the same period will increase from 35.3% in the first half of '18 to about 37% in the first half of '19. Among them, the gross profit share of value-added services will increase from 24.6% in the first half of '18 to about 27% in the first half of '19. Additionally, we do not expect the company to pay an interim dividend as in previous years. The Hong Kong stock property management sector has been strong since the beginning of the year, with a cumulative increase of 46% (up only 8% compared to the Hang Seng State-owned Enterprises Index during the same period). Currently, the average valuation of the sector is 24 times 19-year PE and 19 times 20-year PE. Among them, Choi Life's valuation is the lowest in the industry, only 10 times 19-year PE and 9 times 20-year PE. We expect the company's basic property management services to grow steadily as new housing projects are gradually delivered, while value-added services are expected to benefit from cooperation with leading technology companies to accelerate. We maintained the company's projected net profit per share for 2019-2021 at $0.45 (up 18% year on year), $0.55 (up 22% year over year) and $0.64 (up 16% year over year), and maintained the company's target price of HK$6.5, corresponding to 12 times 19-year PE and 10 times 20-year PE. Based on 19.3% upward space, we maintained the lottery life increase rating.