Overall performance declined 18.84% year on year; the energy saving business increased 18.5%, and gross margin continued to increase. The 2020 semi-annual report showed that the company achieved operating income of 1,239 million yuan, a slight decrease of 0.06% year on year; net profit to mother was 159 million yuan, a decrease of 18.84% year on year. EPS was 0.36 yuan/share, a year-on-year decrease of 20%. The weighted average return on net assets was 8.31%, down 4.38 percentage points from the previous year. By business, the distribution grid energy saving business achieved revenue of 684 million yuan in the first half of the year, an increase of 18.5% over the previous year, and achieved a gross profit margin of 36.56%, an increase of 1.07 percentage points over the previous year. The highlight of the energy saving business is the continuous increase in gross margin. The gross margin in 16-18 was 28.09%, 31.37%, and 32.76% respectively. The gross margin in 2019 increased to 36.13%, and the gross margin in the mid-year report still increased, reflecting the continuous improvement in project quality, operation level, and cost control of the energy saving projects carried out by the company. Affected by epidemic prevention and control and electricity price policy adjustments, electricity sales business performance declined markedly. Revenue of 556 million yuan was achieved in the first half of the year, a year-on-year decrease of 15.5%; gross margin fell to 0.97% from 6.84% in the same period last year. The decline in investment income and accrued credit impairment losses totaled 42 million yuan. Although the performance of the electricity sales business declined in the first half of the year, thanks to the continuous growth of the distribution grid energy saving business, the company's total operating income and total operating costs remained basically the same year over year. On this basis, the main reasons why overall performance still declined significantly were: (1) the year-on-year decrease in investment income of 0.13 million yuan, mainly due to the decline in sales in the cement business of Xinjianan due to the pandemic; (2) accrued credit impairment losses of 0.29 million yuan, which were not calculated for the same period last year. The amount of the company's accounts receivable at the end of the current period increased by 104.53% compared to the end of the same period last year. The vast majority of accounts receivable are less than one year old. We believe that the credit risk of the company's accounts receivable is small, and the accrued impairment losses are expected to recover later. The fixed increase plan has been disclosed, and it is expected that the issue of interbank competition will finally be solved. The company plans to issue shares privately to no more than 35 specific investors, raising no more than 1.88 billion yuan, of which about 1.32 billion yuan will be used to acquire the distribution grid energy-saving assets and related EMC contract rights and obligations of 9 provincial integrated energy service companies under the State Grid. The additional distribution plan clearly states that through this transaction, the listed company has integrated the energy-saving assets of the State Grid distribution grid. After the issuance is completed, there is no competition between the listed company and the controlling shareholders and their affiliates. If this capital operation is successfully completed, the company will become the only distribution grid energy-saving business listing platform under the State Grid. The distribution grid energy saving business market space is broad, and its business model has the characteristics of continuous operation; at the same time, it has high qualifications, capital, and technical barriers, making it difficult for social capital other than the power grid to participate. We are strongly optimistic about the scarcity of the company and the value of future growth. While expanding and strengthening the distribution grid energy saving business, the company, as the only listing platform under the State Grid Integrated Energy Service Group, is also expected to play an important role in the layout and capital operation of the State Grid Integrated Energy Service sector in the future. Profit forecast: Without considering the impact of fund-raising and asset acquisition, we expect the company's net profit to be 400, 4.6, and 500 million yuan in 20-22, and the current stock price corresponding to 20-22 PE is 22, 19, and 18 times. Risk warning: macroeconomic and industry policy fluctuations; progress in fund-raising, acquisitions, and resolution of industry competition falls short of expectations; increased industry competition; high customer concentration and dependency