Net profit loss for the first quarter was 200 million yuan, earnings per share - 0.57 yuan. The company released its 2010 quarterly report today: operating income of 800 million yuan, up 286.6% year on year; operating profit of 100 million yuan, up 310.8% year on year; net profit loss attributable to parent company of 200 million yuan compared to profit of 01 million yuan for the same period last year; earnings per share - 0.57 yuan, net assets per share of 1.53 yuan. A local small to medium developer in Nanchang. The company is a small and medium-sized comprehensive developer based in downtown Nanchang (Donghu District). It is a school-run enterprise (the majority shareholder is Jiangzhong Pharmaceutical Group, the actual controller is Jiangxi University of Traditional Chinese Medicine, and the Jiangxi State Assets Administration Commission exercises funder responsibilities on its behalf). The company's core project is Zijincheng, which is a complex project (the property types cover both residential real estate and commercial real estate): located in Donghu District of Nanchang City, covering an area of 383,000 square meters, a total construction area of 1040,000 square meters, and a floor price of 1,300 yuan/square meter, of which 340,000 square meters are commercial and 700,000 square meters; in addition, the company also has a plot of land in Jingdezhen: the plot is located in Guanzhuang Village, Lumeng Township, covering an area of 66,000 square meters. The main reason for the company's net profit loss in the first quarter of 2010 was the huge non-operating expenses due to anticipated liabilities. The performance characteristics were mainly reflected in the following three points: a sharp increase in carry-over revenue, a sharp decline in gross margin, and huge non-operating expenses. Revenue has grown significantly. The company achieved revenue of 0.8 billion yuan in the first quarter, an increase of 287% over the previous year, mainly due to the increase in carry-over area. Gross margin has declined sharply. The company's gross margin for the first quarter fell 69.6 percentage points year-on-year to 11.2%, mainly due to changes in the project carry-over structure: the carry-over for the same period last year was mainly bottom line, and the carry-over for the same period this year was mainly residential, so gross margin was low. The estimated debt will result in non-operating expenses of up to 200 million yuan. The estimated liabilities for the full amount of joint and several guarantee liabilities that the company may bear during the reporting period were calculated, totaling 205.3 million yuan (principal amount of 15 million yuan, interest of 55.3 million yuan), while the current operating profit was only 1.03 million yuan. Financial health needs to be improved. The company's balance ratio at the end of March 2010 was 78.47%, and the real balance ratio after excluding advance payments was 74.5%. It is at a very high level in the industry, and the long-term financial structure needs to be improved; the real fluctuation ratio is 0.5, and short-term debt repayment pressure is high. The company reported a cash account of 240 million yuan at the end of the period, a decrease of 100 million yuan from the beginning of the year, mainly due to an increase in project development investment and a decline in sales, resulting in a net operating cash inflow of -80 million yuan during the period. Sales performance in the first quarter was poor. Cash received by the company from sales of goods and services in the first quarter was 112 million yuan, down 92.6% from the previous year; compared with the fourth quarter of 2009 (021 million yuan), a decrease of 42.9%; advance payments at the end of the reporting period were 100 million yuan, down 39.3% from the beginning of the year, mainly due to carry-over income from pre-sale housing payments and the decline in current sales. Earnings forecasts and investment ratings. We expect the company's earnings per share for 2010-2011 to be -0.42 yuan and 0.27 yuan respectively. Based on the latest closing price of 8.76 yuan, the 2011 dynamic price-earnings ratio is 33 times, the valuation level is high, and the company's single project, and the sustainability of future performance needs to be improved. We maintain the company's “neutral” rating.