Core ideas:

In the first half of 2021, the company realized operating income of 1.36 billion yuan, an increase of 19.57% over the same period last year. The net profit was 47 million yuan, an increase of 316.8% over the same period last year. The company's net profit is in the median of the performance forecast, in line with expectations as a whole. There are two main reasons for the company's smooth turnaround from losses to profits: (1) with the dilution of the impact of the epidemic, the company's PC component business has resumed growth; (2) the company has adjusted the management model of some joint venture models, and the profits and losses brought about by the adjusted financial assets have rebounded in the current period.

From the business point of view, the company's business can be divided into PC prefabricated high-rise buildings, grand mansion and great Rubik's cube. Among them, the operating income of PC component manufacturing business, which accounts for 83.7% of the company's total operating income, reached 1.139 billion yuan, an increase of 12.38% over the same period last year. Under the double pressure of the downward market prices and the sharp rise in the prices of major raw materials, the profit margin of PC components has been squeezed, and the gross profit has dropped to 271 million yuan, down 8.30% from the same period last year. In addition, as the joint plant affected by the epidemic completed the installation and acceptance of the equipment in 2020, the operating income of the company's PC production equipment manufacturing business increased by 306.6% to 221 million yuan.

The company's gross margin in the first half of the year was 26.08%, down 3.08 percentage points from the same period in 2020. The company's gross profit margin declined significantly, mainly because the rise in raw material prices raised the company's production costs, superimposed PC component prices fell, resulting in a significant decline in the company's gross profit margin.

In terms of cost, the company introduced the lean system of Danaher Corp (Danaher) and invited lean experts to deeply participate in the operation of the company's PC factory in order to reduce cost and increase efficiency. The company's period expense rate was 25.50%, down 4.76% from the same period in 2020.

In the first half of the year, the company enhanced the recovery of receivables. For directly operated companies, the company has formulated a more incentive and more stringent special assessment system for payback, supplemented by more stringent measures such as suspension of supply and litigation to promote payback, which has achieved certain results. The company's accounts receivable turnover days in the first half of the year were 326.85 days, a sharp decline of 76.76 days compared with the same period in 2020.