Key investment points: Due to mismatch in the project settlement cycle, the net profit in the interim report fell 80.74% year on year. On the evening of August 26, the company disclosed that it achieved operating income of about 196 million yuan, a year-on-year decrease of 46.68%; realized net profit attributable to shareholders of listed companies was about 10.7956 million yuan, a year-on-year decrease of 80.74%; and achieved basic income of 0.01 yuan per share. The sharp decline in the company's performance during the reporting period was due to: (1) mismatch in the project settlement cycle and low settlement revenue; (2) the expense ratio increased markedly during the period, rising 11.52 percentage points from the previous year to 25.68%. We believe that the decline in the company's mid-report performance is temporary, and the company's performance will pick up as the company's main settlement projects are delivered in the second half of the year. Sales repayments in the second quarter were about 590 million yuan, a sharp increase of more than 293% over the quarter. From January to June, the company's commercial housing sales amount was about 740 million yuan (specifically referring to sales repayments). Among them, the first quarter and the second quarter were 150 million yuan and 590 million yuan respectively. The growth rate in the second quarter was more than 293% compared to the first quarter. Among them, the Phoenix and Xi Phase 2 residential sector contributed the main sales in the second quarter. In the second half of the year, the company's saleable projects include the remaining portion of Phoenix Hexi Phase 2, Suzhou Phoenix International Bookstore, Phoenix Mountain Villa, etc. We expect the company's annual commercial housing sales amount to more than 2 billion yuan, with a year-on-year growth rate of more than 35%. Cultural real estate projects account for about 64.9%, and the potential of the development model is expected to expand. Since 2012, the company's pace of reserves for cultural real estate projects has accelerated. Currently, the company's cultural real estate projects include Suzhou Phoenix Book City, Nantong Phoenix Book City, Yancheng Phoenix, Hefei Phoenix, Taixing Project, and Zhenjiang Project. The total land reserve area is about 754,000 square meters, accounting for 64.9% of the company's total land reserve area. Through the “targeted listing, packaged land acquisition” model, the cost of land acquisition for the company's cultural real estate projects is low, and the comprehensive floor price of the six projects is about 2012 yuan/square meter. We anticipate that with the successive listing and pre-sale of the Nantong Phoenix Bookstore Project and the Yancheng Phoenix Project this year and next two, the synergy between “culture” and “real estate” in the cultural real estate model is expected to be fully demonstrated, giving the potential for rapid development and expansion of the cultural real estate model. Maintaining the “increase in holdings” rating, we expect the company's 2013-2015 EPS to be 0.45 yuan, 0.57 yuan, and 0.70 yuan, respectively. The PE corresponding to the current stock price is 12.3 times, 9.9 times, and 8.0 times, respectively. We maintain the company's “gain” rating based on the following considerations: (1) the company's lawsuit is over; (2) sales are expected to be over 2 billion dollars, and sales are flexible; (3) we are still optimistic about the company's cultural real estate model, and only await further verification and expansion of related projects to achieve potential growth. Stock price catalyst: If the company's Tieguan Alley project plan is announced, it will cause the plot to be revalued, and the company's stock price will benefit from this.