Incident: The company announced plans to cooperate with the US Third Five Group to develop the company's South Six Highway land reserves. Investment proposal: Historical evolution of Zhonglu Co., Ltd.: The company was originally a bicycle factory in Shanghai, and its main products were “permanent” bicycles and related products. In 1994, the company officially completed its A-share listing, then acquired by Zhonglu Group controlled by Mr. Chen Rong in 2001, becoming the first local state-owned listed company in Shanghai to be reorganized by a private enterprise at the time, and officially changed its name to Zhonglu Shares thereafter. Currently, the actual controller of the company is Mr. Chen Rong and his two sons, Mr. Chen Shan and Mr. Chen Tong. The land reserve for this cooperative development is located near Disney: The company announced that it is preparing to cooperate with the 35 Group to develop land reserves on the South Six Highway. The two plots have an area of 565 acres and 132 acres respectively. The two plots of land are only about 4 kilometers away from the planned site of the Shanghai Disney Park. They have a lot of room for development and growth, and are important points of interest for the company in the future. Currently, a simple valuation is based on housing prices near Disney. The total land area of the company on the Nanliu Highway is about 450,000 square meters. Assuming a floor area ratio of 2.5, the total construction area is 1.13 million square meters. Considering the development capabilities and brand value of the 35 Group, we believe that there will be a certain premium on the product price of this project. Judging from the current prices of properties for sale in the surrounding area, we assume that the potential sales price of the project is 45,000 yuan/square meter, while also assuming that the net profit from development is 15%. Using the RNAV valuation method, it is possible to obtain a simple estimate of the company's net assets of 7.855 billion yuan. Based on the current total share capital of 321 million yuan, it is approximately 24.5 yuan per share. About the US 35 Group: The US 35 Group is a large multinational enterprise with diversified development, and its actual controller is the American Ghermezian (Ghermezian) family. The company is involved in many industries, and currently mainly focuses on the three areas of real estate, financial investment, and manufacturing. Among them, the real estate industry is the company's main business as well as a characteristic industry. The development and construction of large-scale shopping and tourism centers is one of the major characteristics of the 35 Group. The company is actively developing high-altitude wind energy: The company announced in September this year that it plans to invest in Guangdong High Altitude Wind Energy Technology Co., Ltd. with a capital increase of RMB 30 million. Also, in December of this year, a non-public offering plan was announced to raise 2 billion yuan in targeted capital from Shanghai Rongshan Investment Center (limited partnership) and Shanghai Rongzhi Investment Center (limited partnership), which are affiliated enterprises of the actual controller Mr. Chen Rong, to invest in a 400-megawatt high-altitude wind power generation project. The company also expects that the average annual power generation sales revenue (excluding tax) after completion of the project will be 1,171 billion yuan, and the average annual profit after tax will be 647 million yuan. It has high economic efficiency and will have a great effect on improving the company's later performance. Investment advice: Without calculating the dilution of share capital due to the company's fixed increase for the time being, we expect the company's main performance in 2014 to come from bicycle sales. The 2015 results mainly came from the sale of “Dingli Allied” investment projects (announced in December 2014 that it is expected to provide a net profit of 150 million yuan for 2015, equivalent to an earnings of 0.46 yuan per share). The 2016 results mainly came from partial production of high-altitude wind energy projects (assuming 50% production capacity, or 200 megawatts, the corresponding equity net profit was about 0.62 yuan per share). The company is a company engaged in the production and sale of bicycles and related equipment, and its traditional main business growth is relatively stable. The company's key future highlights are a total of about 700 acres of land development and high-altitude wind energy projects near Disney. At present, the company has announced plans to cooperate with the Third Five Group to develop this land. In the future, as Disney construction is gradually put in place, the later stages of the project will have great development value; in addition, the company's majority shareholders have also adopted a fixed increase and plan to invest 2 billion yuan in the 400 megawatt high-altitude wind power generation project. As an emerging new energy technology, high-altitude wind energy has good economic and industrial prospects, and has a lot of room for development in the future. We expect the company's earnings per share in 2014 and 2015 to be 0.04 yuan and 0.54 yuan respectively, with fixed increases of 0.03 yuan and 0.39 yuan after dilution. As of December 12, the company closed at 25.23 yuan, corresponding to 631 times PE in 2014 and 46.72 times PE in 2015. According to the diluted valuation, the corresponding 2014 PE was 841 times, and the 2015 PE was 64.69 times. We believe that the company's Disney commercial and high-altitude wind energy projects have prospects, but it is currently in the early stages of the project. First coverage, no ratings yet. Risk warning: The project is in the early stages of progress, and there is some uncertainty.