Incident: The company disclosed its 2020 semi-annual report. In the first half of the year, the company's revenue increased 18.9% year on year to 380 million yuan, net profit from the mother's net profit fell 1.1% year on year to 23.37 million yuan, and net profit after deducting non-return mother increased 28.0% year on year to 16.93 million yuan. The comments on this are as follows: Revenue and non-performance in the first half of the year increased by 19% and 28%, showing relatively rapid growth. Non-recurrent profit and loss for the first half of this year was 6.43 million yuan, mainly government subsidies, down from 10.39 million yuan in the same period last year. 1) Second quarter revenue and net profit after deducting non-net profit increased 73% and 167% year on year, a significant recovery from the first quarter. The first quarter of 2020 was greatly affected by the COVID-19 pandemic, with revenue and net profit falling 47% and 76% year-on-year respectively. Since April, on the basis of the implementation of various epidemic prevention and control measures, the company has made every effort to ensure the orderly progress of projects under construction and vigorous development of new projects through the full cooperation of all parties, reducing the impact of the epidemic. 2) The rapid growth of prepayments, inventory, and contract assets indicates the gradual expansion of the company's business scale. In the first half of the year, the company's revenue increased 19% year on year to 380 million yuan, of which the prefabricated construction project business revenue increased 16% year on year to 280 million yuan, and gross margin decreased 4 percentage points to 29% year on year. The company's advance payments at the end of June increased by 326% to 31.95 million yuan compared to the beginning of the year, mainly due to an increase in materials and construction payments in the current period; inventory increased 30% from the beginning of the year to 88 million yuan, mainly due to an increase in products and inventory; and contract assets increased 80% to 170 million yuan compared to the beginning of the year, mainly an increase in the amount of prefabricated construction projects confirmed according to construction progress but not yet settled. On July 14, the controlling shareholder of the company changed to China Railway; on August 20, the company's abbreviation was changed to China Railway Assembly, and a new general manager was appointed. On July 14, 2020, the subject shares transferred by the agreement on the change of control have completed the transfer procedure, and the controlling shareholder of the company was changed to China Railway. On August 1, 2020, the company announced that it intends to change the company's abbreviation to China Railway Assembly. On August 20, the company abbreviation change was completed. On the same day, the company appointed Mr. Sun Baoliang, the new general manager. From April 2014 to July 2020, Mr. Sun Baoliang served as Deputy General Manager and Financial Director of China Railway Real Estate Group Co., Ltd. National policies have put forward higher development goals for prefabricated development, and relevant policies have been introduced one after another. In 2016, the General Office of the State Council's “Guiding Opinions on Vigorously Developing Prefabricated Buildings” clearly stated that prefabricated buildings should be vigorously developed and that prefabricated buildings should account for 30% of the newly built construction area in about 10 years. In 2017, the Ministry of Housing and Construction issued the “13th Five-Year Plan” for prefabricated buildings, proposing that by 2020, prefabricated buildings will account for more than 15% of newly built construction in the country, with key promotion areas reaching more than 20%. In 2019, the Ministry of Housing and Construction's “Notice on Issuing Key Work Points of the Construction Market Supervision Department of the Ministry of Housing and Urban-Rural Development in 2019” proposed “launching a pilot project for steel structure prefabricated housing construction”. This is the first time that a prefabricated construction policy has proposed a steel structure pilot project. In the first half of the year, the Ministry of Housing and Construction issued the industry standard “Technical Standards for the Inspection of Prefabricated Residential Buildings”, which has been implemented since June 1, 2020. The standardization of the industry and the improvement of prefabricated standards are conducive to the development of technology-leading enterprises in the industry. In July 2020, 13 departments including the Ministry of Housing and Construction jointly issued the “Guiding Opinions on Promoting the Collaborative Development of Intelligent Construction and Construction Industrialization”. The opinions mentioned that the construction industry is a pillar industry of the national economy, providing strong support for the sustainable and healthy development of China's economy. Investment advice: Maintain an increase in holdings rating. The company's net profit from 2020 to 2022 is expected to reach 0.82, 1.08, and 143 million yuan respectively, up 22%, 32%, and 32% year on year, corresponding to price-earnings ratios of 61, 46, and 35 times. The prefabricated construction industry is currently supported by policies, and the industry is in a period of high growth. The company's Jiangsu Suqian production base was successfully put into operation in the first half of 2019, improving production capacity layout. The company's technology and ability to receive orders are strong; after the controlling shareholder becomes China Railway, it is expected that business collaboration will be achieved. Risk warning: Policy support for the prefabricated construction industry falls short of expectations; industry competition intensifies; downstream demand for prefabricated construction falls short of expectations; raw material cost growth is higher than expected; business support brought to the company by China Railway falls short of expectations; impairment losses or intensification of assets such as bad debts.