From January to March 2011, Chongqing Development achieved operating income of 59.4245 million yuan, down 44.30% from the same period last year; operating profit was 526600 yuan, down 97.81% from the same period last year; net profit belonging to the parent company was 3.9891 million yuan, down 81.80% from the same period last year; and basic earnings per share was achieved.

Less real estate settlement income items lead to a decline in income: the company is a real estate A-share listed company in Chongqing, mainly engaged in real estate primary and secondary development, housing sales and leasing, site leasing, tunnel operation and so on. The main settlement project of the company in the first quarter of 2011 is Qi Nian Yuecheng, which has entered the second phase of existing housing sales, the pre-sale has been settled in 2010, and other projects of the company have not entered the settlement during the reporting period. This year, the company's main products include Chongqing Development Shinkansen Project and Chongqing Guohui Center. Kempinski Hotel is located in the project of Chongqing Guohui Center, which has been capped and has entered the stage of curtain wall construction and interior decoration.

The office part of the project has been pre-sold at a pre-sale price of 195 million yuan per square meter, and the apartment part of the project will begin pre-sale in the second half of 2011. According to government planning, the land will be built as "the Crown of Zhongshan City", which is a key project in the urban image design of Yuzhong Peninsula. the ideal height of planning is 240m, the planned construction area is 510000 square meters, and the floor price is 2907 yuan per square meter. This alleviates the company's current shortage of reserves. In 2011, the company is mainly building Banan Jinzhu Industrial Park project, Nanan District Huangshuiya project, Chongqing Development Shinkansen, Chongqing Guohui Center, the first Chongqing Development Project and so on. The company can recognize lower revenue this year and next, which may lead to a decline in short-term performance, but the business has better prospects for follow-up development.

The operating gross profit margin increased and the advance collection decreased: because the projects settled in 2010 included agent construction projects with low gross margins, and the average sales price of existing houses in the second phase of the Qinian Yuecheng project in 2011 was much higher than the average sales price in 2009, the company's operating gross profit margin for the current period was 50.5%, an increase of 19.5 percentage points over the same period in 2010. At the end of 2010, the advance collection of the company's real estate project sales was only 91 million yuan, down 60.83 million yuan or 41% from the end of 2010.

During the period, the expense rate increased significantly: the company's expense rate during the first quarter of 2011 was 49.1%, a substantial increase of 35.2% over the same period in 2010, of which the financial expense rate was 24.5%, an increase of 15.6%, and the management expense rate was 15.7%, an increase of 11.2%. The project of the company is in the early stage of sales, and the management and sales expenses are high. at the same time, the increase of the company's debt leads to a great increase in financial expenses.

Debt ratio increased, financial pressure increased: the company's debt at the end of the first quarter of 2011 was 1.408 billion yuan, an increase of 155 million yuan over the end of 2010, and an increase of 748 million yuan over the end of the first quarter of 2010. The company's asset-liability ratio is 46.4%, an increase of 9.5 percentage points from the end of the first quarter of 2010. At present, there are fewer items on sale, which increases the financial pressure on the company's operation.

Earnings forecast and valuation: we predict that the company's earnings per share from 2011 to 2012 will be 0.12 yuan and 0.17 yuan, corresponding to the closing price of 8.33 yuan on April 25, and the dynamic PE will be 71 times and 48 times respectively. The company has fewer settlement items in the next two years, and its revenue is likely to decline. At the same time, the prospect of further asset injection by major shareholders is uncertain, and we maintain the company's "neutral" investment rating.