Recently, the company announced its 2020 semi-annual report. The first half of the year achieved operating income of 367 million yuan, an increase of 17.12% over the same period, to achieve net profit attributable to shareholders of the parent company of 34 million yuan, a decrease of 32.19% over the previous year. The review is as follows: Revenue grew steadily, and gross margin declined significantly due to the pandemic. In the first half of 2020, the company announced several successful smart street light orders, and received another 160 million orders for the Meishan project in July. Currently, the company uses a business model of investment, construction and operation to promote smart street lights in the Chengdu Shuangliu Project, the Lijiang Ancient City Project, and the Renshou County Project. In addition, smart street light operation services are expected to open up room for growth in the future, such as value-added services for WIFI operation and value-added services for smart parking. The company achieved revenue of 367 million yuan in the first half of the year, an increase of 17.12% over the previous year. In the second quarter, single-quarter revenue reached 149 million yuan, a year-on-year decrease of 17.48%. Compared with the revenue growth rate of 64.38% in the first quarter, this may be due to the fact that the construction section of the Chengdu Greenway Project confirmed more revenue in the first quarter. The continuation of the epidemic in the second quarter led to a slow recovery in manufacturing business. The company's overall gross margin for the first half of the year was 25.63%, down 13.38 percentage points from the same period and 1.31 percentage points from the first quarter. Mainly because the gross margin of the company's greenway system integration project was lower than that of other projects and the epidemic affected the progress of the project, the operating costs were greatly increased. Expenses declined slightly during the period, and net profit is expected to quickly recover. The company's expenses rate for the first half of the year was 13.32%, down 1.01 percentage points from the same period in 2019. Among them, the financial expense ratio was 0.28%, up 0.34 percentage points from the same period last year, mainly due to the increase in the company's interest expenses compared to the same period last year; the R&D expenses rate was 4.02%, up 1.2 percentage points from the same period last year, mainly due to the increase in R&D investment; sales and management expenses decreased by 1.14 and 0.2 percentage points, respectively, from the same period last year, mainly due to the pandemic, related remuneration, travel expenses, accrued production safety expenses, etc. declined compared to last year; in the first half of 2020, the total impairment losses were 6.84 million yuan, compared to the same period last year. Losses are reduced. Taken together, in the first half of 2020, the company achieved net profit attributable to shareholders of the parent company of 34 million yuan, a year-on-year decrease of 32.19%. We believe that the company's street light manufacturing business will resume in the second half of the year, and the smart street light business will gradually increase, and profit growth will pick up rapidly. The net outflow from operating activities increased, and the revenue ratio of the company successfully issued convertible bonds to help land the project in the first half of the year was 0.5737, an increase of 2.45 percentage points over the same period last year. The pay-to-cash ratio was 0.7441, down 3.01 percentage points from the same period last year. Taken together, the net cash outflow from operating activities was 96 million yuan, which is worse than last year's net outflow of 63 million yuan. The company's balance ratio for the first half of the year was 49.81%, up 7.33 percentage points from the same period last year. Mainly because the company issued 200 million yuan of convertible bonds in April. The successful issuance of convertible bonds will increase the company's financial strength. If shares are successfully converted, the company's balance ratio is expected to decline. Investment proposals have been affected by the pandemic, and the company's project progress has been blocked, and operating costs have increased dramatically, leading to a sharp decline in gross margin and net profit margin. However, the impact of the epidemic on costs will gradually weaken, and the company's manufacturing business is expected to gradually return to normal, and it is expected to reap high profits from the sale and operation of smart street lighting products in the future. We reduced the company's 2020-2022 EPS to 0.95, 1.45 yuan, and 2,29 yuan/share (previously 1.23, 1.86 yuan, 2.57 yuan/share), corresponding PE was 29, 19, and 12 times, maintaining the “buy” rating. Risk warning: The epidemic affects the progress of the project; the implementation of the smart street light project falls short of expectations; the progress of convertible debt-to-equity swaps falls short of expectations