In 2012, the company achieved operating income of 747 million yuan, down 74.41% from the same period last year; operating profit of 111.82 million yuan, down 76.21% from the same period last year; net profit belonging to the owner of the parent company was 100.97 million yuan, down 65.48% from the same period last year; and basic earnings per share was 0.18 yuan. The company intends to pay a dividend of 0.18 yuan (including tax) to all shareholders for every 10 shares.

An overview of fundamentals. The company is the real estate business platform under the State-owned assets Supervision and Administration Commission of Zhabei District of Shanghai, which mainly undertakes the construction of old district renovation, matching commercial housing, ordinary commercial housing and indemnificatory housing in Zhabei area. among them, the sale of ordinary commercial housing and supporting commercial housing is the main source of income and profit. After nearly three years of promoting the implementation of the strategy of "innovation-driven, transformational development", the company has basically completed the transformation of industrial layout, from a single real estate development to equal emphasis on real estate development and mining development.

Income structure: during the period, the income of Heyuanxiang Mansion was 470 million yuan, accounting for 66.45% of the total income, and the gross profit was 157 million yuan, accounting for 63.3% of the total gross profit; the income of Pengpu Phase 1 was 96 million yuan, accounting for 13.52% of the total income, and the gross profit was 34 million yuan, accounting for 13.76% of the total gross profit. Heyuan Enterprise Plaza realized revenue of 68 million yuan, accounting for 9.66% of the total revenue, and gross profit of 25 million yuan, accounting for 10.12% of the total gross profit. During the reporting period, the net profit of the company belonging to the parent company decreased significantly compared with the same period last year, mainly due to the centralized delivery of the first phase of Phase C of Pengpu Phase 10 developed by Shanghai Real Estate North Construction Co., Ltd. in 2011.

Corporate profitability: during the reporting period, the company's comprehensive gross profit margin was 37.38%, up 8.84 percentage points from the same period last year; net profit margin was 13.51%, up 3.5 percentage points from the same period last year; and return on net assets was 8.57%, down 15.12 percentage points from the same period last year. During this period, the ability of cost control has declined. During the period, the company's expense rate was 11.24%, an increase of 5.83% over the same period last year. Among them, the sales expense rate was 1.54%, an increase of 0.48% over the same period last year; the management expense rate was 5.28%, an increase of 3.05% over the same period last year; and the financial expense rate was 4.43%, an increase of 2.29% over the same period last year.

There is a lot of financial pressure. The asset-liability ratio at the end of the period is 86.36%. Excluding accounts received in advance, the real asset-liability ratio is 82.82%, an increase of 1.56% over the same period last year, and there is a great pressure on long-term funds; the book monetary funds at the end of the period are 888 million yuan, down 24.15% from the same period last year.

The return of operating cash is poor and the lock-up of performance is weak. During the period, the cash inflow received by the company for selling goods and providing services was 800 million yuan, down 52.9% from the same period last year. The return of operating cash was worse than that of the same period last year, and the project pre-sale was not good. The amount of accounts received in advance at the end of the period was 306 million yuan, down 9.39% from the beginning of the period. The amount received in advance was 40.9% of the settlement income in 2012, and the performance lock in 2013 was weak.

The future will focus on the development of salt lakes. The company holds two salt lakes in Tibet, BABA Longmucuo and Jieze Chaka, with a total reserves of 3.9 million tons of lithium carbonate, 28 million tons of potash fertilizer and 3.3 million tons of boron (boron trioxide), of which lithium carbonate reserves are the first in China and the third in the world. During the reporting period, the company intensified the development of salt lake mining resources in Tibet, completed the preliminary preparations for the construction of salt lake development mines, and promoted the process research and development of comprehensive utilization of salt lake resources and collaborative development of the two lakes. the intermediate test was completed and reviewed by domestic industry experts, and the development process route was determined, which laid the foundation for the follow-up development work.

We previously expected the company's earnings per share from 2013 to 2014 to be 0.18 yuan and 0.21 yuan respectively. Based on the closing price of 10.31 yuan on May 3, 2013, the corresponding dynamic price-to-earnings ratio was 57 times and 49 times respectively, maintaining a "neutral" investment rating.

Risk tips: uncertainty of sales settlement; uncertainty of mineral investment; risk of fluctuation of raw material prices.