Event Overview Huaxia Happiness released its 2020 quarterly report. The company achieved revenue of 19.52 billion yuan, +89.6% year-on-year, and net profit of 2.89 billion yuan, -2.6% year-on-year. Revenue continued to grow rapidly, and cost control capabilities improved. 2020Q1 achieved operating income of 19.52 billion yuan, an increase of 89.6% year on year, and net profit of 2.89 billion yuan, a decrease of 2.6% year on year. The net profit growth rate was mainly lower than the revenue growth rate: 1) taxes and surcharges reached 1.14 billion yuan, a sharp increase of 146%; 2) gross sales margin was 42.4%, down 22.9pct from the same period last year. During the reporting period, the company's expenses rate for the period was 12.6%, down 5.0 pct from last year, and the quality of operations improved. The epidemic affected sales. The industry-city model continued to increase. 2020Q1 achieved sales volume of 15.77 billion yuan, a year-on-year decrease of 48.4%. Among them, sales revenue from industrial parks was 9.96 billion yuan, up 56.5% year on year, real estate development sales were 4.94 billion yuan, down 78.8% year on year; and 2020Q1 achieved sales area of 75,000 square meters, down 76.9% year on year. On the one hand, the company has been hit by the epidemic, and on the other hand, there has been little expansion of land storage since 2018, leading to a sharp decline in sales. Leverage has increased. Financing improvements can be expected. At the end of the reporting period, the company's balance ratio after excluding pre-collected accounts was 58.0%, up 1.5 pct from the end of the previous year; the net debt ratio was 193.6%, up 10.8 pct from the end of the previous year, and the leverage ratio increased. At the end of the reporting period, the company had cash capital of 46.44 billion yuan on hand, an increase of 8.1% over the previous year. The short-term cash debt ratio was 0.62, and the short-term debt repayment pressure was high. Following Ping An's investment, the company's financing channels were greatly expanded, and future improvements in cash flow are worth looking forward to. The investment suggests that Huaxia Happiness's performance has increased rapidly, the new industrial city model has achieved remarkable results, the financing situation has improved, and financial security has improved. We maintain our profit forecast unchanged. We expect the company's EPS for 20-22 to be 6.35/7.91/9.62 yuan, corresponding to PE 3.8/3.0/2.5 times, respectively, maintaining the company's “increase in holdings” rating. Risk indicates that sales fall short of expectations, and preparations for falling inventory prices will affect performance.