Incidents: The company announced its annual report. According to the audit, in 2008, the company achieved operating income of 314 million yuan, a year-on-year decrease of 60.31%; operating costs of 226 million yuan, a year-on-year decrease of 62.84%; realized net profit attributable to the owners of the parent company was 1.94 yuan, a year-on-year increase of 10.36%; earnings per share of 0.64 yuan, net assets of 2.53 yuan per share, and a return on net assets of 25.45%. The company plans to distribute a cash dividend of 0.5 yuan (tax included) for every 10 shares based on the current total share capital of 301.07 million shares. At the same time, the capital reserve fund was used to transfer 2 shares to shareholders for every 10 shares, adding a total share capital of 602.14 million shares. After the transfer, the company's share capital will increase to 361.284 million shares. Analysis of the company's business situation in 2008: The company has a single development project, and business performance is highly volatile. According to the company's annual report, the company achieved operating income of 314 million yuan in 2008, a year-on-year decrease of 60.31%. Excluding the impact of related transactions, the decline in operating income would be as high as 74.18%. Furthermore, in 2008, the company realized net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss of only $48 million, a year-on-year decrease of 70.98%. One important reason why the company's business performance is characterized by high fluctuations is that the real estate currently developed by the company is only one project in Zijincheng. After the Nanchang regional real estate market entered a period of adjustment, the company did not have the convenience of smoothly processing the company's business performance like other developers of cross-regional and multi-project development. Related transactions have helped the company achieve impressive operating results. According to the company announcement, there were two major related transactions between the company and its major shareholders in 2008: first, the company sold 106 “Zijincheng” project stores with a construction area of 6,242.56 square meters to Nanchang Jiangzhong Investment Co., Ltd., with a transaction price of 109,907,306.79 yuan. The operating income brought by this related exchange accounted for 34.95% of the company's 2008 revenue; second, the company will be located in the “Zijincheng” commercial area for 1,265 underground parking spaces, with a price of 111,386,00 yuan to be offset by 0.000.00 yuan The company's equivalent debt to Jiangxi Jiangzhong Pharmaceutical (Group) Co., Ltd. The related transaction brought the company net non-operating income of 105 million yuan, accounting for 54.47% of the company's total profit in 2008. The above related transactions have greatly improved the company's performance. In 2008, the company achieved net profit attributable to the owners of the parent company of 1.94 yuan, an increase of 10.36% over the previous year; earnings per share of 0.64 yuan, an increase of 10.36% over the previous year, successfully fulfilling the company's performance promise of “the total net profit achieved in 2008 is not lower than the level of 2007”. At the same time, with the end of fiscal year 2008, the company's major shareholders' share reform promises have also been fulfilled. The company is facing a certain amount of financial pressure. Although the company's balance ratio fell 4.3 percentage points from the same period last year to 68.66% at the end of 2008, the balance level improved. However, at the end of 2008, the company had only 6.8477 million yuan in cash remaining on the company's books and 138 million yuan in advance accounts, while the inventory conversion rate was only 0.06 times, down 0.16 times from the same period in 2007. Furthermore, in 2008, the company's net cash flow from operating activities, investment activities and fund-raising activities was completely negative, totaling 32.44 million yuan, of which operating cash flow was -8.87 million yuan, a decrease of 181 million yuan over the same period last year, a decrease of up to 105.15%. Therefore, for the company, if 220 million yuan of corporate bonds can be successfully issued as soon as possible, it will help ease the company's financial pressure and provide substantial benefits to the company. The distribution of dividends and shares is conducive to enhancing the company's market image. In the company's annual report, it is planned to distribute a cash dividend of 0.5 yuan (tax included) for every 10 shares. At the same time, the capital reserve fund will be used to transfer 2 shares to shareholders for every 10 shares. This is the company's first dividend delivery since Jiangzhong Group restructured Jiangxi Paper in 2006. Although the company's capital is relatively tight, dividend shares are still implemented, reflecting the company's positive attitude of sharing the company's growth with shareholders. We believe that the above dividend decision is not only conducive to establishing a positive market image of the company, but also lays the foundation for better deepening the company's ties with the capital market. Investment suggestions: Based on the basic assumption that the real estate market in Nanchang will still be in the adjustment stage in 2009, the company's EPS for 09 and 10 is expected to be 0.31 yuan and 0.38 yuan respectively. The main risks faced by the company: 1. The Zijincheng project currently developed by the company is located in Nanchang, Jiangxi, so the company's business performance will be limited by the overall development and changes of the Nanchang real estate market; 2. The Zijincheng project is a project currently under development by the company. Although the Zijincheng project will still provide the company with performance guarantees for the next three years or so, after the Zijincheng project is developed, how to ensure the company's performance will face some uncertainty. The current price-earnings ratio for 2009, 10, and 11 corresponding to the company's stock price of 7.11 yuan is 23.04 times, 18.58 times, and 15.23 times, respectively, maintaining a neutral investment rating.