The 1H20 performance is in line with our expectations, and Yunnan Germanium announced 1H20 results: operating income of 357 million yuan, up 55% from the previous year; net profit of 6.047 million yuan, corresponding to profit of 0.009 yuan per share, achieving a year-on-year reversal of losses (loss of 8.245,000 yuan in the same period last year) and in line with the performance forecast range (550-8.2 million yuan). The company's performance reversed losses year over year, mainly due to the increase in sales volume of the company's deep-processing products and the rise in semiconductor product prices. In 2Q20, the company's operating income was 195 million yuan, +54% yoy, +21% month-on-month, and net profit of 4.817 million yuan, with net profit of 4.817 million yuan, a year-on-year reversal of loss/+292% month-on-month. The volume and price of photovoltaic and semiconductor products have risen sharply, driving an increase in gross profit. The sales volume of 1H20 material grade germanium products was -11%, and the sales volume of infrared-grade/photovoltaic/fiber-grade/semiconductor products was +22%/+621%/-8%/+111% year-on-year. The average price of 1H20 material grade germanium products was -11% year on year, while the average price of photovoltaic/semiconductor products was +4%/+184% year on year. 1H20's gross margin was the same year over year, while gross profit was +55% year over year. The share of traditional products declined, and the share of deep processing increased significantly. 1H20's material-grade germanium products had revenue of 90 million yuan, -22% year-on-year; revenue accounted for 25%, year-on-year -25 ppt. Meanwhile, the revenue of photovoltaic/semiconductor products was 0.7/0.3 billion yuan, +651%/+497% year over year; revenue accounted for 21%/9%, +16/+7ppt year on year. Fee rates and impairment levels declined year over year. Thanks to the reduction in management expenses, 1H20's sales+management+R&D+financial expenses were -8.5ppt year-on-year. Asset impairment loss+credit impairment losses also decreased by 4.69 million yuan over the same period last year. The development trend is that the price of germanium has stabilized, but it is still in a historically low range. The average price of the domestic metal germanium in 1H20 was -13% to 6821 yuan/kg, but in 2Q20 it was +2% month-on-month. Currently, germanium prices have also rebounded more than 4% from the low point during the year. Considering that germanium prices have been in the low range of nearly ten years and have fallen below the cost line of some smelters, germanium prices have strong cost support. Future 5G construction is expected to continue to boost germanium prices. Nearly 30% of the world's germanium is used in the field of optical fibers, and fiber-grade germanium tetrachloride is an irreplaceable and important raw material in optical fiber production. In the future, with the further expansion of 5G construction and the construction of fiber-to-the-home integrated broadband networks, we believe that germanium prices are expected to continue to be boosted. Profit Forecast and Valuation Due to the increase in sales forecasts for the company's semiconductor material grade products and photovoltaic grade products, we raised our profit forecast for 2020/2021 by 82%/502% to 0.21/117 million yuan. We switched the valuation method. The current stock price corresponds to the 2020/2021 6.5x/6.0x net market ratio. We raised our target price by 75.3% to 15.78 yuan and maintained a neutral rating, corresponding to the net market ratio of 7.1x/6.6x in 2020/2021, with room for 8.6% increase from the current stock price. Demand for risky germanium fell short of expectations, and the price of germanium fell sharply.