In 2012, the company achieved operating income of 3.271 billion yuan, down 1.21% from the same period last year; operating profit of 64.4801 million yuan, an increase of 710.74% over the same period last year; net profit belonging to the owner of the parent company was 29.8884 million yuan, down 28.22% from the same period last year; and basic earnings per share was 0.0443 yuan.

An overview of the company's fundamentals. The company's business includes real estate development and construction, biomedicine, property management, etc., in which real estate development and construction and biomedicine are the main sources of income and profit. During the reporting period, real estate development and construction and biomedical income accounted for 96% and 1.93%, no significant change over the previous year.

Real estate business. During the reporting period, Harbin Zhongguancun completed an annual housing sales contract of 93 million yuan and a rebate of 123 million yuan; the company's stock real estate sales in Beijing exceeded the annual target, and the net visa amount of Beijing stock real estate sales reached 218 million yuan by the end of the reporting period, achieving a cash rebate of 204 million yuan, alleviating the financial pressure of the company. The project of "dismantling and merging courtyards" in Huaxi Village, Tongji Town, Pengzhou City (Zhongguancun, Chengdu) has been completed and accepted, with a net profit of 6.46 million yuan.

Pharmaceutical business. Huasu Pharmaceutical prescription drugs, business performance improved steadily, 2012 sales revenue reached a record high; over-the-counter drug business (OTC) under the influence of rapid changes in the external macro environment, increasingly fierce competition in the industry, history caused by abnormal channel inventory and insufficient investment in advertising, business performance declined significantly.

Concrete business. During the reporting period, Zhongshi concrete achieved an operating income of 464 million yuan and a net profit of 61.11 million yuan, an increase of 2.86 times over the same period last year. Huludao Zhongshi concrete Co., Ltd. failed to achieve its production target during the reporting period due to the lag of government land supply.

During this period, the ability of cost control has declined. During the period, the company's expense rate was 13.45%, an increase of 0.42% over the same period last year. Among them, the sales expense rate was 5.72%, down 0.09% from the same period last year; the management expense rate was 5.23%, an increase of 0.27% over the same period last year; and the financial expense rate was 2.51%, an increase of 0.25% over the same period last year.

The long-term financial pressure increases, while the short-term financial pressure decreases. The asset-liability ratio at the end of the period is 80.23%. After excluding the accounts received in advance, the real asset-liability ratio is 72.79%, an increase of 0.38% over the same period last year, and the long-term capital pressure is increased; the book currency fund at the end of the period is 229 million yuan, an increase of 56.5% over the same period last year.

Invigorate assets and optimize business structure. The company has successively completed the transfer of 46% equity and trademark rights of Zhongguancun Technology Software Co., Ltd. held by Zhongguancun Technology and Beijing Zhongguancun Construction Engineering Co., Ltd. The transfer of shares held by Zhongguancun Construction Beijing General Municipal Engineering Co., Ltd. is also in progress. At the same time, it also completed the liquidation of Zhongguancun Science and Technology Development (Dalian) Co., Ltd., which is currently in a state of business stagnation. By optimizing the structure of business operation, it brings investment income and cash flow for the company, and further highlights the main business of Zhongguancun Science and Technology Company.

Profit forecast and investment rating. In view of the weak profitability of the company and the uncertainty of the relevant business integration process, we will not make profit forecasts and investment ratings for the time being.

Risk hint: the regulatory policy continues not to relax, and the risk of sales decline in the future.