Key investment points: Private additional capital raised to build three projects. ST Zhongrun announced today that the company plans to issue no more than 130 million shares on a non-public offering, an issue price of no less than 747 yuan/share, and raise capital of no more than 970 million yuan. It is used for the construction of Jinan Century City Phase III, Zibo Overseas Chinese Town Phase V, and Weihai Korea Window Phase III projects. It is estimated that the total investment amount is 1.9 billion yuan, and 970 million yuan will be invested to raise capital. The total planned area of the three projects is 535,000 square meters, with a total construction area of 758,700 square meters. The plan has been reviewed by the board of directors, and still needs to be reviewed by the shareholders' meeting and approved by the Securities Regulatory Commission. We recently researched ST Zhongrun. We believe that the development of the real estate market in Shandong and the abundance of saleable resources guarantee the stability of the company's performance growth. The EPS for 2009, 10, and 11 is expected to be 0.41 yuan, 1.10 yuan, and 1.26 yuan, and the corresponding price-earnings ratios are 24 times, 9 times, and 8 times, respectively. The company's RNAV is 5.23 yuan. Referring to the current valuation level of second-tier real estate leaders, the company is given an absolute valuation of 2 times RNAV and a relative valuation of 10 years and 15 times the price-earnings ratio, taking the average of the two, and giving the company a target price of 13.48 yuan. The initial rating is “increase in holdings” key assumptions: construction progress is in line with expectations; project sales progress is in line with expectations; housing prices in Jinan, Zibo, and Weihai will increase the average annual rate of 15% over the next two years, which is different from public perception: After the previous wave of sharp increases in real estate stocks, the market will focus on land and project reserves of real estate companies. We believe that the company's rich land and project reserves will guarantee the company's performance growth over the next 3 years. At the same time, the company's net sales interest rate is as high as 22%, which is higher than the average profitability of the industry. Abundant land reserves plus higher profitability have made the company a catalyst for stock price performance worth investing in: the real estate market is picking up, and the company's sales are growing more than expected Conclusion Risk: The economy has declined sharply, and the policy is shifting to suppress the real estate market