1. Investment event

The company released the 2020 mid-term report. 2020H1 achieved operating income of 648 million yuan, down 13.68% from the same period last year; net profit from home was 103 million yuan, up 23.53% from the same period last year; and net profit from non-return was 72 million yuan, down 7.60% from the same period last year.

two。 Analysis and judgment

Results are in line with expectations, Q2 single-quarter revenue / net profit increased significantly compared with the same period last year. 1) in terms of revenue: 2020H1 achieved an operating income of 648 million yuan, down 13.68% from the same period last year. Of this total, Q1's operating income was 230 million yuan, down 29.18% from the same period last year. Q2's operating income was 418 million yuan, down 1.88% from the same period last year. In the first quarter, the company's engineering general contracting / project supervision business was greatly affected by the epidemic, and the late resumption of real estate work led to a setback in the real estate design business. In the second quarter, the company's business has fully returned to the level of the same period last year. 2) net profit: 2020H1 achieved a net profit of 103 million yuan, an increase of 23.53% over the same period last year; the net profit of deducting non-return was 72 million yuan, down 7.60% from the same period last year, mainly due to the contribution of 31 million yuan from the company's equity investment. 3) in terms of gross / net profit margin: 2020H1's gross profit margin is 26.18%, which is 0.95 pct higher than the same period last year; and the net profit rate is 15.98%, which is higher 4.21pct than the same period last year. 4) expense rate: the expense rate of 2020H1 during the period is 14.73%, which is higher than that of the same period last year (1.05pct). Among them, the management expense rate was 14.19%, an increase of 0.83 pct over the same period last year; the financial expense rate was 0.54%, an increase in 0.22pct over the same period last year, mainly due to the increase in interest costs on bank loans in the current period; and the R & D expense rate was 5.4%, an increase of 0.21 pct over the same period last year. 5) in terms of assets and liabilities, inventory and contract assets accounted for 17.08% of total assets, increasing 0.79pct over the same period last year. Accounts receivable and bills were 741 million yuan, down 12.82% from the same period last year, accounting for 22.92% of total assets, and 5.17pct was lower than the same period last year, mainly due to the maturity and acceptance of commercial acceptance bills received in the previous period. Accounts payable were 664 million yuan, up 28.19% from the same period last year, accounting for 50.46% of liabilities, and increased 5.48pct over the same period last year. 6) cash flow: the operating cash flow of the company is-92 million yuan, which is 83 million yuan lower than the same period last year, mainly due to the maturity and acceptance of the commercial acceptance bill received by the company last year.

Prefabricated steel structure and prefabricated PC structure ushered in the golden period of development, helping the company to open up the performance growth space. The support of prefabricated buildings on the policy side is increasing. In 2017, the prefabricated Building Action Plan of the Ministry of Housing and Construction proposed that prefabricated buildings accounted for more than 15% of new buildings in 2020, and in July 2020, the Ministry of Housing issued three major policies to accelerate the development of prefabricated steel structures, especially prefabricated steel structures. As one of the first batch of national prefabricated construction industry bases, more than 80% of the projects include prefabricated architectural design, and nearly 100% of concrete residential projects adopt prefabricated technology. With the improvement of prefabricated building permeability, the company's performance is expected to continue to grow.

The company's regional expansion and orderly promotion, the establishment of many molecular companies, is expected to continue to increase the market share. In 2020, the company has completed the establishment of Central China headquarters subsidiary (Hubei), Singapore subsidiary, Zhejiang Branch and Nanjing Branch, and the establishment of Suzhou New area Branch and Suzhou Xiangcheng Branch is in progress. the company continues to promote regional expansion and increase market share through the establishment of relevant molecular companies.

The main business continues to improve, the return on equity investment continues to improve, and the performance of two-wheel drive increases. In recent years, the company's profitability continues to improve, and the cash flow is good. In the context of the continuous growth of the main business, the company has increased equity investment and as an effective supplement to the main business, by strengthening post-investment management and other ways to continuously improve the profit contribution of the investment business. During the reporting period, the profit of Suzhou Industrial Park surveying and Mapping Geographic Information Co., Ltd., which the company participated in, increased significantly, the net profit of 2020H1 increased by about 4 times compared with the same period last year, and the indirect investment Ucloud Information Technology Co., Ltd. successfully listed Science and Technology Innovation Board. During the reporting period, the company's investment business contributed better income, of which the investment income was 3.85 million yuan and the fair value change income was 27.67 million yuan, which calmed down the impact of the epidemic on the company's operation to a certain extent. In addition, Qianxin Technology Group Co., Ltd., which was indirectly invested by the company, was listed on Kechuang Board in July 2020, IPO of Suzhou Zuizuzui Electronic Technology Co., Ltd. was accepted in June 2020, and the listing guidance filing application of Suzhou Ruikeda connection system Co., Ltd. has been accepted by Jiangsu Securities Regulatory Bureau. In the future, the company's equity investment income is expected to continue to contribute to profits and contribute to the new growth of the company's performance.

3. A brief Analysis of Finance

In recent years, the company's operating income and return net profit have maintained a steady growth trend, and revenue has declined under the impact of the 2020H1 epidemic.

2020H1 achieved an operating income of 648 million yuan, down 13.68% from the same period last year, and a net profit of 103 million yuan, an increase of 23.53% over the same period last year.

The company's 2020Q2 net profit increased significantly in a single quarter. 2020Q2's revenue in the single quarter was 418 million yuan, down 1.88% from the same period last year, and its net profit was 83 million yuan, up 36% from the same period last year.

During the period from 2015 to 2019, the overall expense rate remained stable, while the 2020H1 expense rate increased slightly. The expense rate of 2020H1 during the period was 14.73%, an increase in 1.05pct compared with the same period last year. The company's gross profit margin remained stable on the whole, with a significant increase in net profit since 2018. 2020H1's gross profit margin was 26.18%, an increase of 0.95 pct over the same period last year, and a net profit margin of 15.98%, an increase of 4.21pct over the same period last year.

4. Investment suggestion

It is estimated that the EPS of the company from 2020 to 2022 will be 0.81 soybean 1.17 yuan per share respectively, and the current stock price will correspond to a dynamic price-to-earnings ratio of 18.4 hip 15.2 excerpt 12.7 times, maintaining the "recommended" rating.

Risk hint: the risk that the prefabricated building is not up to expectations; the recovery of accounts receivable is not as expected.