In the first half of 2013, the company achieved operating income of 458 million yuan, an increase of 16.82% over the same period last year; operating profit of 79.6784 million yuan, an increase of 5.22% over the same period last year; net profit belonging to the owner of the parent company was 57.433 million yuan, up 19.98% over the same period last year; and basic earnings per share was 0.08 yuan.

An overview of fundamentals. The company's largest shareholder is Zhejiang Wolong Real Estate Investment Co., Ltd., holding 43.32%; the actual control is Chen Jian. At present, the main layout of the building under construction of the company is in Qingyuan, Wuhan and Shangyu area of Shaoxing, and the cost of obtaining land for the three projects is relatively low. The company's carry-over income in the first half of the year mainly comes from Tianxiang Huating and Qingyuan Wuzhou projects, totaling about 260 million yuan. In the first half of the year, the company achieved a total operating income of 458 million yuan, an increase of 16.82% over the same period last year, and a net profit of 57.433 million yuan, an increase of 19.98% over the same period last year.

The real asset-liability ratio declined compared with the same period last year, and the long-term financial pressure eased somewhat. The company's final cash was 420 million yuan, down 9.09% from the same period last year; the asset-liability ratio at the end of the period was 55.12%, and the real asset-liability ratio excluding accounts received in advance was 48.69%, down 1.21% from the same period last year.

During the period, the expense rate decreased compared with the same period last year. During the reporting period, the company's expense rate was 8.7%, down 3 percentage points from the same period last year. Among them, the sales expense rate was 2.4%, down 0.3% from the same period last year; the management expense rate was 6%, down 1.9% from the same period last year; and the financial expense rate was 0.3%, down 0.8% from the same period last year.

The project reserve is rich. The company's ending inventory is 2.504 billion yuan, an increase of 12.07% over the same period last year, accounting for 71.91% of the total assets, and the project reserve is relatively rich. The land cost of the company is relatively low, and the current land reserve is about 2.44 million square meters, which can meet the development needs of the company for 3-5 years.

Profit forecast and investment rating. We previously expected the company's earnings per share from 2013 to 2014 to be 0.12 yuan and 0.14 yuan respectively, maintaining the company's "neutral" investment rating. According to the latest closing price, the corresponding dynamic price-earnings ratio is 25 times and 22 times respectively.

Risk hints: real estate regulation and control policy risks; project sales and development progress may not meet expectations.