Investment points Investment points should include core content such as the company's basic characteristics, main business points, researchers' investment logic and recommendation basis, performance expectations, investment ratings, valuation analysis, and risk alerts. The main points should be prioritized; the important ones should come first. The main points are 3-5, and the total number of words should not exceed 1000 words. Risk warning: In the first half of 2020, the company achieved total operating income of 1,317 billion yuan, a year-on-year decrease of 11.16%, mainly due to the impact of the epidemic and a decrease in sales volume. Among them, Q2 achieved revenue of 821 million yuan, a year-on-year decrease of 0.64%, a significant decrease from the first quarter. The company achieved revenue of 712 million yuan in sanitary ceramics, of which 93 million yuan was achieved for smart bathrooms; overall bathroom revenue in the first half of the year was 11.66 million yuan. Revenue in domestic and foreign markets changed -10.89% and -11.75% year-on-year respectively. Revenue from domestic retail channels and engineering channels changed year-on-year by -16.37% and 0.89%, respectively. In the first half of 2020, the company achieved a comprehensive gross profit margin of 32.64%, up 0.76pct from the same period last year; realized a net profit margin of 9.88%, down 0.3 pct from the same period last year. The company's gross margins in Q1 and Q2 were 29.31% and 34.65% respectively, with year-on-year changes of 0.17pct and 0.59pct, respectively. The company's expenses for the first half of 2020 were 20.30%, up 1.97pct year on year, mainly due to increases in management expenses and sales expenses. The sales expense ratio increased by 0.94pct year on year; the management expense ratio increased by 1.61pct year on year, mainly due to increased remuneration, increased depreciation of fixed assets, and increased insurance premiums; the R&D expense rate increased 0.5pct year on year; and the financial expense ratio was -0.10%, down 0.58pct year on year, mainly due to increased exchange earnings and lower loan interest rates by banks. In the first half of 2020, the company's asset impairment loss+credit loss accounted for -3.53%, up 8.71 pct from last year; net operating cash flow per share was 0.85 yuan, an increase of 1.06 yuan/share over last year, mainly due to maturing notes receivable, increased accounts payable, and reduced remuneration payments. Profit forecast and rating: We maintain the company's profit forecast. We expect the company's EPS in 2020-2022 to be 1.0 yuan, 1.14 yuan, and 1.33 yuan, and the closing price corresponding to PE on August 25 is 17.1, 15.0, and 12.8 times, respectively, maintaining the “prudent increase in holdings” rating. Risk warning: downside macroeconomic risks, declining new real estate construction area, falling complete bathroom implementation, falling short of expectations, offline store optimization falling short of expectations, risk of deteriorating cash flow