Investment Overview In 2012, the income statement results for the year of flowers were quite average. Both income and profit increased to varying degrees, but the increase was limited. Annual operating income increased 11% year over year to RMB 6.23 billion, while net profit increased 7.8% year over year to 1.14 billion. The company's property sales revenue increased 9.1% year over year to 5.89 billion, mainly driven by an increase in sales area. The annual account area was 694,000 square meters, an increase of 35.5% over the previous year, a significant increase. However, the average entry price dropped sharply from 10,363 yuan/square meter in 2011 to 8,416 yuan/square meter, a drop of 18.8%. The company's gross margin in 2012 fell 2.3 percentage points to 40.5% compared to 2011, but it is still at a high level of profit among domestic housing companies. The sales performance target for the year of flowers was achieved in 2012, and the contract sales volume for the whole year was RMB 8 billion, exceeding the sales target by 11%. Urban complexes are still the company's main product. In 2012, it reached 3.9 billion yuan, accounting for 49% of total contract sales. The remaining 51% of contract sales comes from high-end residential and middle to high-end residential products, and the share of contract sales is divided between 31% and 20%. The Pearl River Delta and the Chengdu-Chongqing Economic Zone are still the core regions for many years. The contract sales volume of the two has reached 75%. Several flagship complex projects in Shenzhen and Chengdu have provided the company with a steady flow of sales cash. In the next 1-2 years, the sales structure of the year of flowers will change: sales in the Pearl River Delta region will be concentrated in the second and third tier regions such as Dongguan, Huizhou, and Guilin; the sales share of the Chengdu region will continue to rise to about 50%, and sales growth in the second and third tier cities of Jiangsu will also be more significant. Compared to the end of 2011, the asset liability statement at the end of 2012 improved, but to a limited extent. At the end of 2012, the total debt for the year of flowers reached 7.88 billion yuan, an increase of 2.39 billion yuan over the end of 2011, mainly due to the increase in priority bill financing at the end of 2012. Overall, net debt increased slightly from the end of 2011 to 230 million yuan to 4.39 billion yuan. The net debt-equity ratio was 66.4%, down 6 percentage points from the end of 2011. In the next year, the company's maturing debt will be 2.45 billion, so the risk of debt repayment is less. In 2013, the sales target for the year of flowers was set at RMB 10 billion, with a planned construction area of 1.5 million square meters and a planned completion area of 1.15 million square meters. The above three indicators are up from 2012, reflecting that management is still more optimistic about the main trend in 2013. If there are no major changes in the overall macro-environment, and we are optimistic about the company's sales and revenue growth in 2013, sales and new construction conditions in the Chengdu area will be the focus of our attention. We believe that sales for the 2013 Year of Flowers will continue to improve. In the first quarter of 2013, the company completed sales volume of 1.8 billion dollars, an increase of 75% over the previous year, which reflects an aggressive strategy and the continued recovery of the market. We have reason to believe that the company's sales target of 10 billion will be a probable event. Furthermore, we increased the company's 2013 revenue and net profit to 8.2 billion and 1.26 billion to reflect the increase in sales and completion area. We give the Flower Year “Collection” rating. The target price for 12 months is HK$1.35, which is equivalent to 4.5 times the expected price-earnings ratio for 2013.