Net profit attributable to the parent company increased significantly. The company released its 2010 interim report today: operating income of 1,166 billion yuan, up 39.13% year on year; operating profit of 242 million yuan, up 950.28% year on year; net profit attributable to parent company: 166 million yuan, loss of 17 million yuan for the same period last year; earnings per share of 0.19 yuan and net assets per share of 2.39 yuan. Focus on regional developers in the Yangtze River Delta. The company is a regional developer focusing on the Yangtze River Delta region, with projects mainly distributed in Hangzhou, Dongyang, Nanjing, Chongqing, Xi'an and other places. The increase in gross margin led to a sharp increase in net profit. The company's real estate business settlement revenue for the first half of the year was 1,098 billion yuan, up 38.74% year on year; gross profit margin was 36.55%, up 11.57 percentage points year on year. Projects mainly participated in settlement in Zhejiang Province in the first half of the year, so gross margin was high. The increase in gross margin is the main reason why profit growth is much higher than revenue growth. Poor sales performance. The company did not release specific sales data for the first half of the year, but the cash received from selling products and providing labor services was 773 million yuan, down 10% from the previous year. The company's advance payment balance as of the end of June was 1,797 million yuan, down 26% from the beginning of the year. Cash has been drastically reduced, and short-term debt repayment pressure is high. Book cash was 689 million yuan, down 32% from the beginning of the year; net operating cash inflows were -330 million yuan, compared with 124 million yuan and 520 million yuan for the first half of 2009 and 520 million yuan respectively. “Short-term loans plus non-current liabilities maturing within one year” was 2,297 billion yuan, an increase of 176% over the beginning of the year. The company's short-term debt repayment pressure is high. Excluding advance payments, the balance ratio is 49%, which is basically the same as at the beginning of the year, and the long-term financial structure is quite reasonable. A new plot of land has been added since 2010. The company announced on August 6 that Zhejiang Tiandu Industrial, a wholly-owned subsidiary, recently won the “Yu Zheng Listed (2010) No. 52” plot in Yuhang, Hangzhou, at a cost of 127 million yuan, increasing the construction area by 48,600 square meters and the floor price of 2,615 yuan/square meter. Profit forecasts and investment ratings. Without considering the company's 2009 private distribution plan, we expect the company's earnings per share for 2010 to 2011 to be 0.37 yuan and 0.43 yuan respectively. Based on the latest closing price of 5.36 yuan, the corresponding dynamic price-earnings ratios are 14.5 times and 12.5 times, respectively. The valuation level is low, and the project layout is in second- and third-tier cities, maintaining the increase in holdings rating. Risk warning. Industry cycle risk, capital chain tightening risk.