Shanghai Yatong Co., Ltd. (hereinafter referred to as "the company") released its annual report on March 30, 2009, the company's operating income was 439 million yuan, an increase of-13.02% over the same period last year; the total profit was 7 million yuan, an increase of-75.47% over the same period last year; the net profit of shareholders belonging to the parent company was 4 million yuan, an increase of-85.81%, and diluted earnings per share was 0.01yuan, an increase of-86% over the same period last year.

In 2009, it was affected by the global financial crisis and the traffic decline caused by the opening of the Yangtze River tunnel and bridge. The opening of the Yangtze River tunnel and bridge on October 31, 2009 has a great impact on the company's water transport business. According to the water transport flow after the opening of the Yangtze River tunnel and bridge, the company adjusts flights in time to reduce losses. At the same time, some elderly ships will be eliminated and various expenses will be reduced. In 2001, a total of 7.5572 million passengers were transported, down 6.5 percent from the same period last year; 112.92 vehicles were transported, down 7.47 percent from the same period last year; the income from the main business was 438.75 million yuan, a decrease of 13.02 percent over the same period last year; the total profit realized was 6.3002 million yuan, a decrease of 75.47 percent over the same period last year; and the net profit was 393.83 million yuan, down 84.45 percent over the same period last year.

We believe that when analyzing the impact of 2009 performance, we mainly pay attention to the following factors: (1) the decline in transport business. The transportation revenue was 272 million yuan, an increase of-6.66% over the same period last year, the transportation cost increased by-1.89% over the same period last year, and the profit margin of transportation operation decreased by nearly 4 percentage points to 11.85%. The company's revenue declined and the operating profit margin declined. In fact, the transportation business has entered a state of break-even operation, and the main reason for the decline in transport profits is the huge impact on the company's water transport business after the opening of the Yangtze River tunnel and bridge, which is the main reason for the decline in revenue and profits.

(2) Communication engineering business. The revenue was 49 million yuan, an increase of 6.02% over the same period last year, the cost increased by 7.74% over the same period last year, and the profit margin of transportation operation was 30.03%, a decrease of nearly 1 percentage point, mainly due to the support of the steady improvement of the domestic economy, and the profit of communications operation remained stable. But it has little impact on the company's performance.

(3) taxi business. Revenue 26 million yuan, year-on-year growth-8.23%, cost growth-19.53%, transportation operating profit margin of 46.34%, up nearly 7 percentage points, mainly due to the steady improvement of Shanghai economy, operating profits remain stable. But it has little impact on the company's performance.

(4) from the quarterly income and profit analysis. Revenue in the fourth quarter of 2009 was 96 million, 111 million, 105 million and 126 million respectively, especially a 15 per cent year-on-year increase in the fourth quarter of 2009, while the net profit in the fourth quarter of 2009 was 15 million,-16 million,-40 million and 0.53 million respectively, especially in the second half of 2009. The Yangtze River transportation market has undergone great changes.

(5) operating profits continue to lose money. In 2009, the company's operating profit was-3.52 million, the investment income was 13.2 million yuan, and the asset impairment was 3.27 million. After deducting investment income and asset impairment, the company's operating profit should be a loss of 13.48 million yuan. The company's main transportation business has been in a state of "loss" for two years.

(6) in 2009, the company's non-operating income was 13.92 million yuan, down 55% from the same period last year. The net non-operating income expenditure decreased by 199.8 million compared with the same period last year, accounting for 295% of the total profit of 68.3 million. The net profit belonging to the parent company is 3.93 million. The net profit excluding non-operating income expenditure and investment income is a loss, indicating that the company's main business is in a very difficult period.

(7) We believe that in 2010, the company's main transport business was affected by the decline in Yangtze River transport, and the traffic volume will continue to decline slightly, and the main reason is that a large number of goods and people are transferred to the Yangtze River tunnel and bridge. the company's communications business and taxi business growth is slow, while investors hope that the Chongming tourism real estate development project has no income, the future development direction should have a huge restructuring and direction choice.

(8) the company is determined to implement the asset exchange work as soon as possible. The major shareholders of the company are very concerned about the prospect of Yatong Company and intend to carry out a major asset restructuring of the company. Due to the policy obstacles in the major asset reorganization plan, it is prepared to peel off the water transport assets, including ships, some wharves and other non-performing assets, which have generated large losses, and inject them into hotels, guesthouses and other assets that adapt to the development of Chongming industry.

We believe that, looking forward to 2010, the transportation business will be affected by the decline in traffic volume, and the revenue will decline to a certain extent, while the communications and taxi business will have little impact on the company's operation. the real estate business will become a new growth point of the company's revenue and profit, and the company's operating profit and net profit will recover steadily. The important asset restructuring and injection work of the parent company has not yet been formally determined, there are many uncertainties, and our forecast does not include the content of new asset restructuring.

We expect that the company's income in 2010 and 2011 will be 476 million and 531 million respectively, net profit will be 26 million and 39 million respectively, and earnings per share will be 0.08 yuan and 0.12 yuan respectively. We believe that the company's performance will continue to show a certain decline, and with the support of real estate, there will be a rebound in 2010. the current stock price has reached 174x and 115x PE in 2010 and 2011. At present, the stock price of more than 13 yuan has been overvalued, the stock price has included the expectation of asset restructuring and long-term value, and the trading opportunities of the Shanghai World Expo have gradually declined. It has risen more than 60% since we recommended the stock in November 2009, and we downgraded the company to "neutral".