Summary of results in the first half of 2011: the company achieved operating income of 663 million yuan, an increase of 53.03% over the same period last year; operating profit of 151 million yuan, an increase of 47.27% over the same period last year; net profit of 110 million yuan belonging to the owner of the parent company, an increase of 50.73% over the same period last year; and basic earnings per share of 0.1038 yuan per share.

The volume and price of settlement items rose in the first half of the year. The company completed its restructuring in May 2009 and transformed into a comprehensive developer located in the Yangtze River Delta region of Ningbo (62%), Hangzhou (6%), Changshu (22%) and Taizhou (10%). The development products are mainly residential and office buildings. There are two reasons for the sharp improvement in the company's performance in the first half of 2011: 1. Low base effect. In the same period last year, there were fewer carry-over resources, and the delivery volume of this phase was greatly increased (Ronganqin Bay and Rongan Garden Weipan and Shanghu Central Garden Phase II). 2. The average price of the settlement project in this period is higher. The average price of Ronganqin Bay settled in this period is more than 20, 000 per square meter, and the average price of the second phase of Shanghu Central Garden project is about 8000 yuan per square meter, with a gross profit margin of about 70 per cent, raising the company's comprehensive gross profit margin in the first half of the year to 46 per cent.

Three fees and land value-added tax increased compared with the same period last year. The high gross profit projects settled during the reporting period also led to a substantial increase in land value-added tax, and the company's business tax ratio increased by 8 percentage points to 14% during the reporting period compared with the same period last year. During the period of the company, the expense rate increased by 3.2 percentage points to 8.2% compared with the same period last year, mainly due to the increase in the number of employees.

The cash flow gap is widening and short-term funds are tight. As of the end of June 2011, the currency fund of the company was 235 million yuan, the coverage rate for short-term debt was only 49%, the net inflow of operating cash was-1.108 billion yuan, and the gap was 570 million yuan larger than that of the same period last year. The amount received in advance was 1.115 billion yuan, an increase of 169 million yuan over the beginning of the year, and the real debt ratio was 64%, slightly higher than at the beginning of the year, but still at a reasonable level.

Take care of the land in the first half of the year. The company sold the land cautiously in the first half of the year, only one commercial and residential plot in Ninghai County, Ningbo City, with a construction area of about 95000 square meters, and the total reserve of the proposed project under construction increased to 1.5 million square meters. In the second half of the year, the company plans to continue to steadily implement the market strategy of first stabilizing the coastal areas of the East China Sea and then distributing the country, and strive for one or two new projects.

Profit forecast and investment rating. The company has few settlement projects this year, and most of them are expected to enter the settlement cycle in 2012. We expect the company's EPS from 2011 to 2012 to be 0.30,0.63 yuan, with a dynamic price-to-earnings ratio of 26 times and 12 times yesterday's closing price of 7.66 yuan, maintaining a "neutral" rating.