Incident: On the evening of June 16, Pingtan Development (002702, hereinafter referred to as the company) issued an announcement stating that the owner (Pingtan Comprehensive Experimental Zone Transportation and Construction Bureau) published the bid evaluation results on the Pingtan Comprehensive Experimental Zone Tender Information Network, and determined that the company was the first successful candidate for the Jinjingwan Sewage Treatment Plant (Phase I) project and the BOT project of the Sansong Reclaimed Water Plant Project. Comment: (1) The company's ability to obtain municipal projects in Pingtan will be verified once again. According to industry experience, the gross margin of the BOT sewage treatment project during the construction period is about 30-50%, and the gross margin during operation after completion of the project is about 30%. We roughly estimate that the two projects, the Jinjingwan Sewage Treatment Plant Phase I Project and the Misong Reclaimed Water Plant, can contribute about 80 million yuan in gross profit to the company during the construction period. After completion, they can contribute about 36.938 million yuan or 55553 million yuan (after completion of the future Jinjingwan Sewage Treatment Plant Phase II project). Based on a net profit margin of 20%, the annual profit that can contribute to the company is 7.384 million yuan or 11.111,000 yuan, respectively. Although the profit contribution of the project is not significant compared to the company's current market value, winning the bid once again demonstrated the company's ability to obtain projects under construction on Pingtan Island. We also have more reason to believe that the future company can benefit from the construction and development of Pingtan Island. (2) The company's development ideas are clear, and expectations are gradually being fulfilled. The company's expectations to participate in and benefit from the construction of Pingtan Island are gradually being fulfilled. Since the company signed the “Cooperation Framework Agreement on Investment and Construction in the Pingtan Comprehensive Experimental Zone” with the Pingtan Management Committee in September 2011, it has aimed at the historical opportunity for the development and construction of Pingtan Island, and the change of senior management of the country and the reunification of the two sides of the Strait have accelerated the elevation of Pingtan Island to the height of the national strategy, making this opportunity even more prominent. The company also expanded its business scale and enhanced its profitability through its own resource advantages, platform advantages, and full seizing the development opportunities of Pingtan Island. The company benefited not only from conceptual hype, but also from actual practical performance to the listing. Furthermore, from the recent announcements of listed companies, we have also seen that national policies (15% tax benefit), shareholders' will (promise not to reduce holdings in the next 1 year), business strategy (change name to Pingtan development, focus on core business), and correct business layout (strategic cooperation with the management committee, multi-faceted layout, and open up new growth points) are all moving in a good direction. We analyzed that the company has the motivation, ability, and conditions to seize the opportunities for the construction and development of Pingtan Island to expand and strengthen the listed company. (3) Benefiting from Pingtan's development, subsequent growth can be expected. The company has stated that it will continue to actively participate in the construction of Pingtan infrastructure projects in the future and actively expand related projects in line with the Pingtan Industrial Development Guiding Catalogue. We analyze the company's possible future benefit paths as follows. (4) Profit forecasting, valuation and investment recommendations. Since the company's profit settlement of the Zhongfu Plaza project will not be settled until 2015, we have updated our profit forecast to estimate that the company's earnings per share from 2014 to 2016 were 0.12 yuan, 0.57 yuan, and 0.78 yuan, respectively. The corresponding PE valuations were 68.38 times, 14.07 times, and 10.42 times, respectively. Based on the 2015 performance estimate, the company's valuation is reasonable. Considering the company's woodland assets of about 1 million mu, the company has benefited from the construction of Pingtan Island and has huge development prospects, giving the company an investment rating of “increase in wealth.” (5) Risk warning. Main business revenue risk. Since the company's main business is highly dependent on the real estate boom, if the real estate market declines, it will clearly affect the profits of the company's main business. The implementation risk part of the Pingtan Island project in the Pingtan Comprehensive Development Zone has not yet been fully finalized, and there is still a possibility that the company will fail to win the project. Accounts receivable risk. Most of the company's Pingtan development projects are government projects, so there are no credit issues with payment. However, the collection period of accounts receivable for government projects is usually longer than that of ordinary projects, which may have a certain impact on the company's cash flow. Forestry policy risks. Protecting the environment and returning farming to forests are still the general trend of our country's national policy. Due to the high revenue of the company's forestry projects but low gross profit, if national policy factors affect forestry, the performance of the company's main business will fluctuate greatly. Risk of inexperience entering a new neighborhood. The company's Pingtan project has risks of talent shortages, management risks and technical risks after entering a new industry.