The results of Hanshang Group's annual report in 2010 are basically in line with our expectations: the company's operating income in 2010 was 738 million yuan, up 18.39% from the same period last year; the operating profit increased from-22.426 million yuan in 2009 to 1.1136 million yuan; the net profit belonging to shareholders of listed companies was 13.259 million yuan, up 198.19% from the same period last year. Net profit after deducting non-operating profit and loss rose from-1601.81 in 2009 to 5.445 million yuan, an increase of 21.46 million yuan. The basic EPS is 0.08 yuan; the ROE is 2.75%, an increase of 1.81% over the same period last year; and the cash flow per share of operating activities is 0.93 yuan, which is 11 times that of EPS in the same period.

Benefiting from continuous business adjustment, extension expansion and brand upgrading, all business divisions have grown significantly: among them, the 10-year sales revenue of the three major operating stores of Hanyang Shopping Mall, 21 Shopping Mall and Xinwuzhan Shopping Mall increased by 3.79%, 35.08% and 24.22% respectively to 154 million yuan, 333 million yuan and 98.02 million yuan. The exhibition revenue of the convention and exhibition center reached 54.32 million yuan, an increase of 5.25% over the same period last year.

Due to the increase in sales promotion and the rapid increase in labor costs, the gross profit margin decreased slightly by 1.33 percentage points to 26.77%: in this period, Chinese businessmen implemented measures such as raising the wages of 694 employees, giving an one-time reward to 715 retired employees, and improving the treatment of management and technical personnel. in addition, due to the increase in promotions such as the renovation of old shopping malls, the opening promotion of new stores, and group-buying discounts. Together, operating costs grew by 22.05% faster than operating income by 18.39%, dragging down gross profit margin by 1.33 percentage points from 2009 to 26.77%.

The results of cost intensification and management optimization show that the expense rate has decreased in each period: due to the projects such as the renovation of Hanyang Shopping Mall, the expansion of 21 Shopping Mall and the construction of Han Shang Ginza, the expense rate has been maintained at a high level in each period. As the company gradually optimized operation management and implemented cost-intensive measures, the sales expense rate decreased by 0.91 percentage points to 6.37%; the management expense rate decreased by 1.87 percentage points to 17.68%; and the financial expense rate decreased by 0.1 percentage points to 4.32%. The total expense rate during the period dropped sharply by 2.88 percentage points to 28.37%. With the completion of the Han Shang Ginza project and the transformation and adjustment of other shopping malls, the implementation of various cost control means, and the optimal allocation of operating resources, we expect that there will be room for further decline in the expense rate during the period, which will be a channel to improve profit margins in the future.

There were more non-operating profits and losses, which led to a sharp increase in net profit margin by 1.08 percentage points to 1.8%: the company generated 14.16 million yuan of non-operating income in the current period (of which 4.81 million yuan was gained from the disposal of fixed assets and 8.98 million yuan was reduced from real estate tax and land tax). The non-operating expenditure is much more than 1.87 million yuan, resulting in a large number of non-operating profits and losses included in the current income statement. It directly led to a net profit growth rate of 222% in the fourth quarter, driving the full-year net profit margin up 1.08 percentage points to 1.8%. If the impact of non-recurrent profit and loss is excluded, the EPS is 0.03 yuan (instead of 0.08 yuan before exclusion), which is basically consistent with our previous expectation of 0.024 yuan.

The Han Shang Ginza project is progressing smoothly, and the rich performance returns are worth looking forward to: by the end of 10 years, the Han Shang Ginza project has completed a total sales area of 60, 000 square meters, with a sales amount of 740 million yuan, a rebate of 416 million yuan, and an overall average sales price of 12000 yuan / square meters. in line with our previous expectations. We estimate that the Han Shang Ginza project will bring the company more than 840 million yuan in income and a net profit of more than 62 million yuan. Since the revenue of the project must be gradually recognized according to the sales progress after completion and settlement, the revenue and profits will be recognized that during the 11-year and 12-year performance, the generous performance returns have brought abundant cash flow to the company. so that Han businessmen have sufficient strength to carry out business scale expansion, shopping center expansion, format brand upgrading, is the cornerstone of the implementation of a series of development and growth strategies.

Maintain the profit forecast and maintain the investment rating of increasing holdings: Hanshang Group has high-quality commercial resources of "three circles and one center" in Wuhan, which promotes the steady development of the main business under the joint promotion of extension expansion and connotation growth. With the successful completion of the Han Shang Ginza project in 11 years, the performance ushered in an inflection point, and the company's strength will mount a new platform. We predict that the EPS from 2011 to 2013 is 0.18,0.26 and 0.33 yuan, while the current PE is 123,55 and 38 times. We expect that in the future, Han businessmen will follow the successful mode of the Han Shopping Ginza project in the development and operation of projects such as the expansion of 21 Shopping Center and the transformation of the Convention and Exhibition Center, and please climb another high-rise building in terms of operation methods and management means. The thinking of the future development of Chinese businessmen is gradually clear, the income sustainability is enhanced, the uncertainty is gradually weakened, and the investment value is gradually revealed. As the Han Shopping Ginza confirmed its full income in 11 years, the expansion of 21 Shopping Center was basically completed in 12 years, and the transformation direction of the Convention and Exhibition Center was settled 13 years ago, various important growth drivers have achieved a close "turnaround" in time. We maintain the "overweight" investment rating, the risk mainly comes from the fluctuation of real estate prices, the intensification of business competition in Wuhan, and the lack of sustainable endogenous growth.