Investment highlights:

The company announced its three-quarter report. From January to September 2014, the company achieved operating income of 191 million yuan, a decrease of 46.76% over the previous year; net profit of 0.2 million yuan, a decrease of 97.84% over the previous year; and basic earnings per share of 0.003 yuan, a decrease of 98.01% over the previous year.

Among them, the company achieved operating income of 060 million yuan in the third quarter, an increase of 76.49% over the previous year; net profit of -33 million yuan, a decrease of 90.18% over the previous year; and basic earnings per share of 0.060 yuan, a decrease of 87.50% over the previous year. The performance was generally in line with expectations.

Short-term income declined due to the scarcity of developable land, and gross margins were still high. The company's main revenue this year is the final payment of land south of the Van River. Since there is little land available for development in this area, which is only 1.5 square kilometers, at the same time, due to the adjustment of the real estate industry cycle, short-term land negotiations have been relatively slow, and short-term income is facing a decline. However, the company's gross margin is still as high as 63%, indicating that the company has plenty of room for profit, and there is room for appropriate adjustments in the future to achieve balanced revenue and profit development.

Regional development in Lianhua Lake is accelerating, and there is room for future growth. In the long run, the company can still be expected to grow: 1) The area available for development is large: the company's Lianhua Lake area is about 20,000 mu of land available for supporting development, which is 20 times the company's annual sales volume in the past. Future planned uses can develop in various business formats such as commerce, tourism, pension, and housing; 2) The tourism area of Lianhua Lake is becoming more mature: As the only national wetland park in the region, Lianhua Lake has gradually established popularity in surrounding cities, and visitors are expected to exceed 800,000 visitors per year; 3) The ecological effects of driving land appreciation in the northern region are obvious: The environment is relatively poor, and The acceleration of regional development in Lianhua Lake will enhance the ecological environment for real estate development in the region, and the effects of land appreciation will be obvious.

Attracting investment has been accelerated, and the new city's infrastructure is becoming more and more mature. The development of Tieling New Town is a key task of the municipal government. Currently, units at all levels are actively cooperating. 1) Accelerate the investment promotion strategy, which is expected to bear fruit soon: the city leadership team took the initiative to actively engage with brand car and bicycle manufacturers to actively attract investment; 2) The city's supporting facilities are becoming more mature: at present, key middle schools and primary schools at the city and county levels have moved into the new city, and construction of key hospitals and commercial areas has also been completed. The growing popularity of the new city will drive sales of real estate in the region, which in turn will drive first-level land development.

Investment suggestions: The Lianhua Lake area is being developed at an accelerated pace, the supporting facilities of the new city are becoming more and more mature, the city's investment promotion is being recommended in an orderly manner, and the company has plenty of room for future growth. The valuation level is lower than the industry level, maintaining profit forecasts and stock growth ratings.

Regional development in Lianhua Lake is accelerating, the new city's infrastructure is becoming more mature, the city is accelerating investment promotion, and there is plenty of room for future growth. Maintaining the judgment that the 14-16 EPS was 0.73, 0.73, and 0.74, the current stock price corresponding to PE is 21X, 21X, and 21X, which is lower than the average of park development 24X, maintaining the “increase in holdings” rating.