Investment points Our view: The company continues to optimize finance and reduce leverage in the first half of the year based on the principle of balanced and steady management. The book cash increased by 28% compared to the end of 2018, and the net debt ratio decreased by 28 percentage points compared to 2018A, falling to the normal level of the industry. The company's sales promotion pace was uneven in the first half of the year, and sales growth in the first half of the year was slow. In the second half of the year, it is expected to add 120 billion dollars in value, increasing supply capacity. The company actively acquired land in the first half of the year and continued to invest heavily in the Yangtze River Delta. Large-scale level 1 and 2 joint projects in Taiyuan and Zhengzhou have been converted into land storage one after another. This portion of land storage is expected to be converted into saleable value more quickly. The company's overall land cost is not high, and it maintains a certain advantage in the industry. The company's current stock price corresponds to a dividend yield of 3.7% in 2018 and 6 times the corresponding PE in 2018. Investors are recommended to pay attention. The interim results were in line with expectations: 2019H1 achieved operating income of 26.62 billion yuan, an increase of 86.3% year on year; gross profit of 6.36 billion yuan, an increase of 52.0% year on year; and core net profit of 1.96 billion yuan, an increase of 25.9% year on year. The profit margin remained stable, with gross margin of 23.9% and core net profit margin of 7.3%, all in line with the end of 2018. The overall interim results were in line with expectations. Increased supply efforts in the second half of the year: In 2019H1, the company achieved contract sales volume and area of 56.7 billion yuan and 2.82 million square meters, respectively, up 3.9% and 11.1% year-on-year respectively. Sales in the first half of the year completed 40% of the annual target. The company's current sales completion rate is slightly lower than that of other housing enterprises in the industry, mainly due to the uneven pace of promotion and more promotion in the second half of the year. In the second half of the year, the company's sales value is 120 billion yuan. It is estimated that the removal rate reaches 69% and can complete tasks throughout the year. The average sales price for the first half of the year was 20,100 yuan/square meter, down 6.5% year on year, maintaining the leading level in the industry. Contract sales were distributed by region. Hangzhou accounted for 36% of contract sales. Other cities that contributed significantly to sales were Fuzhou, Shanghai, Nanjing, and Zhengzhou, which accounted for 12%, 11%, 6%, and 4% of sales in the first half of the year, respectively. Land acquisition costs maintain their advantage: 2019H1 has added 23 new land projects with an additional construction area of 4.208,000 square meters. More than half are located in the Yangtze River Delta region. The new land acquisition cost is 4,207 yuan/square meter, accounting for only 21% of the average sales price, and the land acquisition premium rate is 12.6%, maintaining a low level. As of June 2019, the company's total land reserve was 26.5 million square meters, an increase of 4.3% over 2018, and the overall land cost was 4,465 yuan/square meter. The company's land reserves account for relatively high land reserves in the Yangtze River Delta and Haixi regions, accounting for 42% and 25%, respectively. The company's large-scale level 1 and 2 joint projects in Zhengzhou and Taiyuan have been transformed one after another. In the first half of the year, the company delisted nearly 600,000 square meters of land in Zhengzhou, and the two cities expect to further transform more than 6 million square meters of first-level projects in the future. Risk warning: macroeconomic growth is slowing, industry regulation policies are tightening, liquidity is tightening, commercial housing sales fall short of expectations, and RMB depreciation.