Summary of results in the first three quarters of 2012: the company's operating income was 701 million yuan, down 31.35% from the same period last year; operating profit was 56.5311 million yuan, down 78.26% from the same period last year; net profit belonging to the owner of the parent company was 121 million yuan, down 60.51% from the same period last year; and basic earnings per share was 0.1139 yuan per share.

The decline in performance was due to a decrease in carryover and an increase in asset impairment losses. The sharp decline in the company's performance in the first three quarters of 2012 is mainly due to two points: 1, the decline in the scale of settlement. The main settlement of this period is the Shanghu Central Garden Project Phase II, Phase III and other projects, there is no new property delivery, the settlement scale has decreased compared with the same period last year; 2, asset provision losses increased. The company's current land receivables included an asset impairment loss of 140 million yuan, an increase of 2025% over the same period last year.

Sales have maintained a high growth rate. The main items sold by the company during the reporting period include: new plate (Rongan Butterfly Garden, Wangjiangnan) and inventory (Rongan House, Rongan residence, etc.), with a total sales contract value of 3.716 billion yuan, calculated according to the caliber of the cash flow statement over the same period last year, an increase of 164% over the same period last year, the sharp increase in sales was mainly due to the increase in the volume of sales during the period, and the introduction of preferential promotions in a number of projects. By the end of the third quarter of 2012, the company still received 4.998 billion yuan in advance, an increase of 156% over the beginning of the year, and the degree of performance guarantee was greatly improved.

The financial pressure has obviously improved. Due to the substantial increase in sales, the company's paper cash by the end of September 2012 was 410 million yuan, a decrease of 13.41% compared with the beginning of the year, and the net cash flow of operating activities was 2.416 billion yuan, compared with-1.296 billion yuan in the same period last year. After deducting the amount received in advance, the real debt ratio is 31.73%, down 26.99 percentage points from the beginning of the year.

The return of the Yinzhou plot to increase profits will expand the reserves of the central and western regions. Due to the delay in the delivery of land by the government, the company and Ningbo Land Bureau terminated the contract for the sale of Miaoyan land in Yinzhou Xincheng, returned 2.3 billion yuan of land transfer fee, and received government compensation of 415 million yuan, which is expected to increase the company's profit by 90 million yuan. The company did not add new reserves in the first half of the year, saying that in the next three years, land reserve expansion will be concentrated in 2 provincial capital cities (Hangzhou + X), 2 prefecture-level cities (Ningbo + Taizhou) and 2 county-level cities (Changshu + Ninghai). Another provincial capital city will be carried out in the central and western regions and inland provincial capital cities.

Profit forecast and investment rating. We expect the company's EPS from 2012 to 2013 to be 0.47 yuan and 0.59 yuan, calculated at yesterday's closing price of 7.25 yuan, with a dynamic price-to-earnings ratio of 15 times and 12 times, the company's project gradually entered the delivery period, the performance is highly locked, and given the "overweight" rating.