Performance summary: 2020H1 achieved revenue of 14.55 billion yuan, a year-on-year increase of 6.5%; realized net profit of RMB 1.27 billion, an increase of 8.1% over the previous year. The performance performance was basically in line with expectations. The gross profit margin was 20.3%, the year-on-year performance was flat, the net profit margin was 8.8%, and the net profit margin was a slight increase of 0.12pp over the previous year. With the Yangtze River Delta and Haixi as the core, the cumulative sales growth rate has been corrected: the company's monthly sales have resumed growth since April 2020, rising from a low of 3.2 billion yuan in February to 13.6 billion yuan in July, with an average initial removal rate of 70% for new projects. The company's contract sales in January-July reached 69.6 billion yuan, a cumulative increase of 1.3%. The average contract sales price was 15,321 yuan per square meter. The average price remained basically the same until 2019, achieving 49.7% of the annual sales target of 140 billion yuan. Judging from the sales amount structure, the company has the Yangtze River Delta and Haixi regions as the core, and the two major regions account for 46% and 25%, contributing more than 70% in total. Land acquisition efforts have increased dramatically, and the land storage layout has been optimized: 2020H1 added 32 new projects, added 4.84 million square meters of land storage (equivalent to 1.3 times the sales area during the same period), with an average cost of 7,472 yuan per square meter. Although 66% of the new land projects were acquired through cooperative land acquisition, the land acquisition equity ratio remained at 64%, with a consolidated ratio of 86%. At the end of the reporting period, the company's total land reserves were 27.4 million square meters, with a value of 470 billion yuan, which could be developed for more than three years. Among them, Tier 1 and 2 cities accounted for 76%, the overall land cost was 4,919 yuan per square meter, and the overall equity ratio was 58%. In terms of urban layout, Zhengrong continues to implement the “1+6+X” strategy. Among them, the Yangtze River Delta and Haixi regions account for relatively high commodity values, 36% and 28%, respectively, while the central region accounts for 22% of goods. The company's investment intensity in third- and fourth-tier cities has increased. The share of land storage in third- and fourth-tier cities has increased to 18.3% from 12.8% in 2019. Overall, the company has not only maintained a high share of Tier 1 and 2 cities, but also deployed higher quality Tier 3 and 4 cities. Financing costs have improved significantly, and the debt situation has been optimized: in 2020, the company actively grasped the financing window period, and the average financing cost fell to 7.0% from 7.5% at the end of 2019. At the same time, the company's debt structure has been optimized. At the end of June 2020, the company's net debt ratio was further reduced from 75.2% at the end of 2019 to 71.4%, the short-term cash debt ratio increased from 1.76 to 2.09, and the share of short-term debt fell from 34.2% to 30.0%. Profit forecast and rating: The company's EPS for 2020-2022 is expected to be RMB 0.70/0.82/0.95 respectively, and the corresponding dynamic price-earnings ratio is 6.4/5.5/4.7 times. The investment side of the company has increased, and the project layout is in line with the development direction of the urban agglomeration. At the same time, the debt side has improved markedly. We maintain our “hold” rating, and the target price of HK$5.39 remains unchanged. Risk warning: sales fall short of expectations; project delivery pace falls short of expectations, etc.