Events:

Recently, we investigated Jiayu shares and exchanged views with the company manager on the business operation and development of the company. Our views on the company are as follows: the company is the leading enterprise of energy-saving doors and windows, with a production capacity of more than 7.2 million square meters, and the production capacity has completed the national layout. The main businesses are doors and windows and curtain walls, and the operating income of the two businesses is basically maintained at a ratio of about 6: 4. The company's products are mainly direct sales model, the main customers are Evergrande Real Estate and so on. Formed from the bidding, production and construction installation of a leading service, to create a complete industrial chain of energy-saving doors and windows and curtain wall companies. The company was founded in 1987, so far 28 years, the actual controller is Tian Jiayu, through Jiayu Xinxin Investment Co., Ltd. holds 39.66% of the shares of the company. The door and window industry belongs to large industries and small companies, and the company's market share is estimated to be less than 1%.

First, the company's production capacity layout has completed omni-directional coverage, and the production capacity is still being gradually released. The production capacity of doors and windows of the company is more than 5 million square meters, and the production capacity of curtain wall is more than 2.2 million square meters. The company has set up seven regions in North China, Southwest, South China, Northeast, East China, Central China and Hainan, nearly 20 production bases, and completed the market layout in nearly 300 large and medium-sized cities across the country. According to the transportation radius of 300-500 km, the production capacity layout of the company can basically cover all prefecture-level cities in the country, and the national capacity layout of the company is basically completed. As the release of the company's capacity is a gradual process, for example, 40% of the production capacity has been released in the first year of production in the northeast region, and 20% has been released every year since then, and all production has been reached in the fourth year. Production in other areas reached production in 3 years, and 60% was released in the first year of production. With the layout of the company, the company's capacity from 2015 to 2016 is in a trend of continuous release.

Second, sufficient orders to ensure the steady growth of business income. The order in the hands of the company is about 20-3 billion yuan, which ensures the growth of the company's business income in the coming year. In the first half of 2015, in the face of the industry downturn, new orders were obtained of about 2.3 billion yuan, providing the basis for the company's performance growth in 2015. In the first half of 2015, the company's operating income reached 906 million yuan, an increase of 18.23% over the same period last year. It is expected that the growth rate of operating income will continue to increase in the second half of the year, and will remain at around 20% for the whole year. The company's biggest customer is Evergrande Real Estate Group, with orders accounting for 30%. In the case of the real estate downturn, relying on large real estate companies will help the company to avoid risks and achieve stable growth.

Third, the company's project rebate has begun to improve, and the unsettled contracts in inventory have become the basis for the release of income. The company's operating cash flow has been negative in recent years, including the first half of 2015. But in fact, the company's engineering rebate has begun to improve in 2015, and the company's net operating cash flow has not been negative in the first half of 2015 due to the use of bank acceptance bills and commercial bills. At the same time, there are 1.215 billion yuan of unsettled assets formed by the construction contract in the company's inventory, which will be released as operating income in the future, providing the basis for the growth of future operating income.

Fourth, the cost addition method ensures the stability of the company's gross profit margin. The company's customers are mainly real estate companies, providing one-stop services from product production to installation for real estate development. The pricing of contract orders generally adopts the method of cost plus, so the fluctuation of raw material prices has little impact on it, and the company's gross profit margin will maintain a stable state. However, due to the intensification of competition in the curtain wall industry, bidding and price reduction led to a continuous decline in the level of gross profit margin, but the gross profit margin of doors and windows remained relatively stable at about 16%. As the company takes the initiative to reduce curtain wall orders, the company's gross profit margin will remain stable.

Fifth, order selection and capital guarantee provide the basis for the company's performance growth. As an engineering project company, the company occupies a large amount of funds, especially the curtain wall funds take up a long time, the curtain wall construction is generally more than one year, while the door and window construction is generally about half a year, and the labor cost is cheap. Taking into account the low gross profit margin of the curtain wall and the long time occupied by funds, the company is more demanding in the choice of orders and is more willing to take orders for doors and windows. It is expected that the proportion of doors and windows in future orders will gradually increase. At the same time, major shareholders of the company are willing to lend to listed companies and through bank loans to ensure that the company's capital needs are met, and the interest rate of bank loans is only 10% higher than the benchmark interest rate. the guarantee of funds provides the basis for the growth of the company's performance.

Sixth, the online plus retail strategy opens up a new space for the development of the company. The company plans to develop the door and window retail industry, through offline stores to join, while opening up online channels to achieve online and offline integration. Whether it's an acquisition or the integration of your own IT team, there is a high probability that something will take shape in the company's online business in the second half of 2015. Through the integration of online and offline, the company realizes the B2C sales model. At present, the number of houses in stock is huge, and it is generally necessary to redecorate and replace doors and windows in a 10-year cycle. as the demand for secondary decoration enters a stage of high growth, the potential demand for door and window replacement is huge. Although domestic customers are not used to changing the consumer awareness of doors and windows, but from abroad, the demand of the door and window retail industry is large. The retail industry of doors and windows has a huge development space in the future, and the retail industry of the company's 13th five-year Plan should surpass the current public clothing industry.

Seventh, the company is technologically leading and has a strong sense of resource integration. The company has 631 in-service technical and R & D personnel, accounting for 31.6% of the staff, has more than 120 patented technologies, participates in a number of national industry standards, and accumulatively participates in more than 30 national industry standards. The company's system doors and windows can be used in different areas, can meet different demand levels, and has the characteristics of energy saving, intelligence and energy generation. Using its own technology, the company will gradually change from a full range of services such as design, manufacturing and construction to a business model based on system development and technical services. The company has been engaged in the door and window industry for 30 years and has a deep understanding of the industry. In addition to improving its own technical quality, the company is also actively looking for suitable targets for integration in the field of energy-saving doors and windows and smart homes, expanding its market share and promoting its leading position in energy-saving doors and windows. As a small company in a large industry, the scale of the industry is large, and the extension of the company has a wide space to expand.

Earnings Forecast and Investment rating: the company's earnings per share from 2015 to 2017 are expected to be 0.20,0.25,0.31 yuan. Based on the closing price of 11.42 yuan, the corresponding dynamic PE is 36 times, 30 times and 24 times, maintaining the company's "recommended" investment rating.