Matter: On July 13, 2020, the company announced a plan for the non-public offering of A-shares, and plans to introduce the strategic investor Xiaomi Technology. The company plans to issue no more than 2.08 million additional shares to Xiaomi Technology in a targeted manner, with a total capital raised of no more than 134 million yuan. The issue price is 6.07 yuan/share. The net capital raised will be used to supplement the company's working capital. Comment: Improve the equity structure and supplement liquidity. The company and Xiaomi signed the “Strategic Cooperation Agreement between Dongyi Risheng Home Decoration Group Co., Ltd. and Xiaomi Technology (Wuhan) Co., Ltd.”. The cooperation period is three years after the agreement comes into effect. After the completion of this private offering, Mr. Chen Hui and Ms. Yang Jin directly and indirectly hold a total of 62.03% of the company's shares. They are still the company's co-actual controllers. Xiaomi Technology will become the company's shareholder holding 5% of the company's shares. At the same time, it is planned to appoint 1 director to participate in corporate governance, and the shareholding structure has been optimized. Second, all of the capital raised this time will be used to supplement the company's working capital. The Xiaomi Group has established the world's leading consumer IoT IoT platform. The company and Xiaomi Technology will work together to help the company increase its business market share, corporate governance level, and internal value of the enterprise. Give full play to strategic synergies and vigorously promote the development of the home improvement business. Through cooperation, the company and Xiaomi Technology aim to achieve the strategic goals of complementing resources, complementary capabilities, promoting traffic, increasing influence, and improving performance, and achieving mutual benefit and win-win situation. 1) Cooperation in the field of post-expansion of real estate (home improvement and home): The company and Xiaomi Technology will integrate their strategic resources in the real estate sector to lay out the customized hardcover (BBC) market, use the transformation and delivery capabilities formed by the company's existing digital home improvement system, and focus on solving the contradiction between batch and personalization of hardcover for real estate development enterprises, while providing overall solutions for products, scenarios and services, so as to strengthen cooperation with real estate development companies and create new growth points for the company's business. 2) Mutual sales and cooperation of products: The company will give full play to channel synergy with Xiaomi technology and introduce smart home appliances/home products adapted to Xiaomi technology into its home improvement product system. At the same time, Xiaomi will coordinate channels and resources to help support the company in business development and market coverage. 3) Internet advertising cooperation: The company and Xiaomi will make full use of the needs and data of their own platforms to provide each other with advertising of products and services. 4) Supply chain finance cooperation: Xiaomi will provide the company with its supply chain finance platform, guarantee the company's financing channels, payment security, discount costs, etc., and help both parties achieve a win-win situation in the industrial chain. We are optimistic about the development of cooperation between the company and Xiaomi in digital decoration and smart homes, and maintain the “recommended” rating. The company provides customized overall home improvement solutions for individual customers and corporate customers through “home improvement retail” business characterized by chain management and highly industrialized decoration engineering business. Considering the delay in the resumption of work on the company's home improvement projects in various regions during the pandemic, the decrease in the number of new orders signed, and the undecided implementation time of new projects, we adjusted our net profit forecast for the 2020-2021 net profit forecast from 35/419 million yuan to 0.45/0.52/60 million yuan in 2020-2022, corresponding to the current market value of PE 96/82/72 times, respectively. Since the company's business has basically fully resumed work under the guidance of local policies, it is expected that home improvement orders will pick up with the recovery of consumer demand in the home improvement market and the company's mature application of live streaming marketing on new platforms. Furthermore, the company's strategic cooperation with Xiaomi Technology complements the company's cash flow, so it maintains a “recommended” rating. According to the DCF valuation method, maintain the target price of 14 yuan/share. Risk warning: Housing delivery in the real estate market falls short of expectations, and competition for channel expansion is intensifying.