In the future, the real estate market will still face a tight policy environment, but it is unlikely to introduce stricter control policies. Since the second half of 2009, the central government has issued a series of control policies in response to the excessive rise of land prices and commercial housing prices in some areas, and the real estate market will still face a tight policy environment for some time to come. However, as real estate is still an important industry to stimulate the development of the national economy and promote employment, the current level of house prices and land prices is at a historical high level, and there is insufficient motivation to continue to rise, so it is unlikely to introduce more stringent control policies. The real estate sector benefited from inflation expectations and the transaction volume rebounded in the second quarter. In the case of rising CPI and increasing inflationary pressure, real estate is an effective variety to resist inflation. After experiencing the decline of 1 quarter, with the arrival of the sales peak season in the second quarter and the new construction area entering the supply period in 2009, the transaction volume of commercial housing will gradually pick up in the second quarter. The valuation of the real estate sector is at a low level. At present, the 20 10 P/E ratio of mainstream housing enterprises is 15 times, and the 201P/E ratio is 13 times, so the valuation level is low. Focus on the investment opportunities brought by the rapid development of the real estate market in second-and third-tier cities. Compared with first-tier cities, second-and third-tier cities have relatively reasonable housing prices, relatively large demand for self-occupation, and less pressure on supervision and public opinion than first-tier cities. The rapid expansion and growth of the real estate market in second-and third-tier cities will become the main feature of the real estate market in China for a long time to come. Company recommendation. It is suggested to focus on the first-tier housing enterprises with a relatively high proportion of projects in second-and third-tier cities, including Vanke A, Jindi, Shoukai, suning universal and high-quality leading regional housing enterprises, including Fuxing, Binjiang Group, Beicheng Construction, st Dongyuan and Shang Lu Real Estate. Risk warning. At present, the main risk facing the real estate market is still policy risk. It is expected that the real estate market will still face a tight policy environment in the future, and the government may introduce new real estate market regulation policies, which will have a greater impact on the real estate market and thus affect the performance growth of listed companies. Century Securities Limited Liability Company

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20 10 investment strategy report of real estate industry