Incident: Jiayu Co., Ltd. released its 2015 interim report. Revenue for the first half of the year was 906 million yuan, up 18.23% year on year; net profit attributable to shareholders of listed companies was 35 million yuan, up 33.23% year on year. Basic earnings per share (EPS) for the first half of the year were 0.11 yuan/share, compared to 0.08 yuan/share for the same period last year. Comment: Good revenue growth: The company completed the national market layout in the first half of the year, and revenue growth was good. In the revenue structure, revenue from the door and window business was 595 million yuan, up 24.24% year on year, accounting for 65.68% from 62.50% in the same period last year to 65.68%; curtain wall business revenue was 302 million yuan, up 8.15% year on year. Due to the intensification of competition in the curtain wall industry, the company will strengthen the energy-saving door and window business in the future and reduce the proportion of the curtain wall business. Stable gross margin, historic breakthrough in project repayment: The company's gross margin in the first half of '15 was 16.68%, which is basically the same as the same period last year. Among them, the gross profit margin of the door and window business was 16.54%, and the curtain wall business was 15.70%. The company's current sales expense ratio and management expense ratio were 6.20% and 3.36%, respectively, down 0.54 and 0.82 percentage points, respectively, and maintained a low ratio. The company's focus on refined management measures had remarkable results. At the same time, the company pays attention to project payback management, and project repayment accounts for 109.54% of revenue. The company's financial expenses were 32 million yuan, up 104.88% year on year, mainly due to the increase in interest expenses corresponding to the increase in the company's loan and bill discounts during the reporting period. Due to sales growth and good cost control, the company's net profit reached 24 million yuan, an increase of 33.23% over the previous year. The transformation of the business model strengthens the position of a leader in customized doors and windows: the domestic door and window industry is changing, enterprises are gradually shifting from decentralized to centralized, and competition in the industry is mainly shifting to competition in terms of product quality, enterprise brands, and the reputation of enterprises in the industry. The price war cannot continue. At the same time, entering the post-real estate era, real estate developers are also shifting from pursuing speed to focusing on quality. To this end, the company has transformed from a business model for the entire industry chain to a model focusing on system research and development and technical services, attaches importance to brand building to adapt to industry changes and customer needs, and strives to become an industry leader in customized doors and windows. The company integrated Jiayu's latest system door and window product technology and launched door and window system products that can meet different regions, different climate types, and different demand levels in the Chinese market. The system products are composed of aluminum alloy door and window systems, aluminum-plastic composite door and window systems, and multi-function door and window systems, covering the three major fields of energy efficiency, intelligence, and energy generation (renewable energy utilization). It also has a competitive advantage, laying a technological innovation advantage for the company to achieve a profit-centered strategic transformation, which helps enhance product premium capacity. The company currently has 631 technical and R&D personnel, accounting for 31.6% of the total number of employees; 5 new authorized technologies have been added, and the total number of authorized patents has reached 120, and the company's series of products with independent intellectual property rights have been applied to more than 80% of engineering projects; it has participated in the preparation of many national industry standards such as “Technical Regulations for the Application of Architectural Glass”, “General Requirements for Construction Door and Window Hardware”, and “Technical Guidelines for the Application of Construction Door and Window Accessories”. The company has participated in the compilation of more than 30 national industry standards. Increase brand awareness and optimize target customers: During the reporting period, the company was rated as the preferred supplier of China's top 500 real estate development enterprises in 2015, and received the Beijing Construction Hardware Door, Window and Curtain Wall Industry Association - Outstanding Contribution Enterprise Award. The company's internal magazine “Jiayu Time and Space” won the second prize in the Outstanding Internal Publishing Comprehensive Category at the 2015 Enterprise and Business Publishing Summit Forum. The company's downstream real estate industry has a great influence on the company. In terms of customer selection, the company focuses on selecting large developers with strong financial strength, sufficient cash reserves, and strong performance capabilities as partners to minimize the negative impact of macroeconomic control. While sharing the dividends of large developers' continued market share expansion, it avoids and offsets the operating risks brought about by macroeconomic policy regulation. Currently, it has maintained strategic partnerships with the top 100 commercial real estate companies such as Wanda, Evergrande, Vanke, China Resources, CNOOC, Xinhualian, Baolong, and Hailiang; Sports - Yinchuan C&D · Dayue City, China's chief Xianjing resort town - Baolong Haixianjie, Guiyang's first high-rise office building - Guiyang International Finance Tower, Scenic Tower - Hailiang Shangfu, Evergrande Mingdu, Evergrande Oasis, Zhengzhou Jinshui Wanda Center, Zhonghai Ziyu Official Residence, China Resources Silver Lake Blue Mountain and other urban landmark projects. Six major regional production bases have been completed and put into operation, regional operation, and the national layout strategy has been completed: The company has completed the overall layout of production bases across the country, and nearly 20 production bases have been completed and put into operation. The transportation radius has been shortened to 300-500 kilometers. The production capacity scale and processing accuracy have all reached the advanced level in the country. Using sales network platforms spread all over the country, it has given full play to outstanding advantages such as short processing cycle, fast response speed, short transportation distance, and timely after-sales service, effectively reducing operating costs. The production bases currently under construction are located in Heilongjiang, Henan, Jiangxi, Hubei, Anhui, etc., and are distributed over a wide area. The corporate strategy of regionalized management will effectively reduce transportation costs and increase operating gross profit margin. Profit forecast and investment rating: We expect the company's earnings per share in 2015-2017 to be 0.18 yuan, 0.26 yuan, and 0.37 yuan, respectively. Considering the company's leading position in the door and window industry and future growth, we maintain an “gain” rating for the company. Risk factors: risk of changes in real estate regulation policies; risk of overseas business operation; risk of fluctuating raw material prices; risk caused by rapid expansion of the company.