Key investment points: EPS for the first quarter was 0.076 yuan, slightly lower than expected. On the evening of April 23, the company announced its 2012 quarterly report, achieving operating income of 888 million yuan, a slight increase of 5.47% year on year; net profit attributable to shareholders of listed companies was 110 million yuan, down 36.63% year on year, achieving earnings per share of 0.076 yuan, slightly lower than our expectations (0.09 yuan). The main reason for the significant year-on-year decline in the net profit growth rate belonging to shareholders of listed companies during the same period was that gross sales margin fell 11.4 percentage points year on year to 32.11% during the reporting period (real estate settlement revenue with high gross margin was relatively small and the gross margin of the cement business declined); the company's financial expenses increased significantly during the reporting period, increasing 83.75% year over year, to an absolute amount of 10.21 million yuan, or 8.9% of the company's net profit during the same period. The company's expenses rate for the period was less than 9%. During the reporting period, the company's expenses rate for the period was only 8.93%, less than 9%, which is at an excellent level in the industry. Among them, the sales expense ratio was 2.40%, the same as the same period last year; the management expense ratio was 3.98%, down 1.26 percentage points from the same period last year, reflecting an improvement in the company's management capacity; and the financial expense ratio was 2.55%, an increase of 1.08 percentage points over the same period last year, due to the increase in the company's loans. The Zhoushan Islands New Area Plan will be reported. Lihao Company's recent “Zhejiang Zhoushan Islands New Area Development Plan (Draft for Comments)” has been validated and revised by the Zhejiang Provincial Government and will soon be submitted to the State Council. We believe that Ningbo is the hinterland of the Zhoushan Archipelago New Area, and the construction and development of the Zhoushan Islands New Area will effectively drive the development of Ningbo's economy, thereby speeding up population agglomeration in the Ningbo region, increasing residents' purchasing power, and ultimately benefiting the development of real estate in the Ningbo region. Ningbo Fidelity, the regional leader in real estate in Ningbo, will benefit from it. Maintaining the company's “buy” investment rating, we expect the company's EPS in 2012-2014 to be 0.64 yuan, 0.82 yuan, and 1.09 yuan, respectively, and the corresponding dynamic PE will be 11.8 times, 9.2 times, and 6.9 times, respectively. We maintain the company's “buy” investment rating based on the following considerations: (1) the company's performance was basically locked in 2012, and the net profit growth rate is expected to exceed 40% year on year; (2) the hidden land reserves of major shareholders and the good prospects for regional economic development in Ningbo will boost the company's growth; (3) the rise of the construction of the Zhoushan Islands New Area will effectively drive the development of the Ningbo economy and benefit the company.