Q2 revenue has accelerated, and the increase in raw material prices and impairment restricts profits in the short term. The company's 2021H1 realized revenue of 5.31 billion yuan, an increase of 37%, a compound growth rate of 6% for H1 in two years, a net profit of 100 million yuan, a decrease of 18%, and a net profit of 80 million yuan after deduction, a decrease of 18%. The decline in profit was mainly due to the decrease of gross profit margin and the increase of credit impairment due to the increase in raw materials and labor costs. From a quarterly point of view, Q1/Q2 achieved revenue of 1.93 trillion yuan, respectively, with an increase of 31%, 41%, and accelerated revenue, respectively, and achieved a net profit of 703 million yuan, with a year-on-year change of + 26%, 55%, respectively, with a year-on-year change of + 26%. In terms of business segment, the revenue of architectural decoration / curtain wall decoration / intelligent business is RMB 1.52 billion, respectively, with an increase of 18%, 93%, 60%, and the volume of curtain wall and intelligent system integration business. 2021H1's newly signed orders totaled 9.28 billion yuan, an increase of 19%, of which public clothes / housing respectively totaled 5.90 billion yuan, or 24% more than 11%. The growth of orders was steady. Currently, the company has signed unfinished orders of 26.2 billion yuan, which is 2.4 times the revenue in 2020, and there are plenty of orders on hand. In the follow-up, with the continuous transformation of the company's orders, raw material price fluctuations and impairment factors gradually fade, and the annual performance is expected to grow steadily.

Gross profit margin has declined, expense rate has declined, and Q2 cash flow has improved significantly. The gross profit margin of 2021H1 Company is 13.1%, which is mainly due to the increase in raw materials and labor costs in the first half of the year, while the revenue share of curtain wall business with lower gross margin has increased by 8.3 pct. The gross profit margin of architectural decoration / curtain wall decoration is 13.2%, respectively, 10.1% and 2.3 pct, respectively. The expense rate during the period is 9.6% quotation YoYmure 1.4 pct, of which the sales / management / R & D / financial expense rate is changed by-0. 6 pm. 0. 7 pm. 0. 3 pct. The decline in sales expense rate is expected to be mainly due to stricter regulation and control of real estate, the company's business expansion tends to be cautious, and the reduction of marketing activities; the decline in management expense rate is mainly due to the effectiveness of the construction of the company's project information management system. The increase in R & D expenditure is mainly due to the continuous increase of R & D investment in the fields of materials, design, intelligence and informatization. The impairment loss of assets (including credit) is about 51 million yuan, an increase of about 23 million yuan over the same period last year. It is expected that under the tightening of real estate financing, the company will increase the provision for impairment of residential decoration business based on prudent principles. The net interest rate is 1.9%, which is 1.3 pct of YoYMui. 2021H1 Company's net operating cash flow net outflow 1.05 billion yuan, basically the same as the same period last year, of which Q1/Q2 is 1.08 billion yuan net outflow / net inflow 32 million yuan, Q2 month-on-month improvement. The cash-to-cash ratio / cash-to-cash ratio is 104% / 93%, respectively, with a year-on-year change of-2 / 19 pct.

The industrial built-in strength is outstanding, and the BIM system empowers the intelligent construction. The company continues to promote the research and development of industrial interior products, which has changed to the seventh generation, and has built two self-assembled decoration production lines, which can realize a large proportion of factory prefabrication, on-site assembly and dry construction. the products have the advantages of low harmful substances such as formaldehyde, ready-to-live, and can provide sustainable market services after decoration. At the same time, the company continues to strengthen the development of BIM technology, and the efficiency of BIM deepening design has been increased by another 30% in the first half of the year. At present, the company's BIM system is relatively perfect, which can integrate the design and deepening of management and control scheme, intelligent production, construction and installation, etc., to achieve the effects of less cutting and assembly on site, efficient collaborative production of final assembly and accessories factory, simultaneous start of multi-modules, and obvious reduction of on-site scrap rate. The company's assembly system has outstanding advantages, BIM information tools enable, in the assembly decoration market gradually open stage, the company is expected to take the lead to benefit.

Investment suggestion: we forecast that the company's return net profit from 2021 to 2023 will be 4.5x62m respectively, with a change of 42%, 20% and 15%, respectively. The current share price will be 0.34pm, 0.40x0.47, and the current share price will be 2021 times higher than that of PE in 19-16-14, maintaining the "buy" rating.

Risk hints: the risk of rising prices of raw materials, the risk that the promotion of industrial built-in business is not as expected, the risk of bad debts arising from accounts receivable, the risk of tightening real estate regulation, etc.