The company's main business scope includes design, production, installation, repair and maintenance of elevators, escalators, automatic sidewalks and intelligent mechanical parking equipment, platform screen door equipment, design and production of elevator electrical parts and related electrical products, elevator guideways and related spare parts, auto parts, etc. The company realized operating income of 2.958 billion yuan in the first half of 2020, an increase of 5.94% over the same period last year, and the net profit attributed to shareholders of listed companies was 312 million yuan, an increase of 9.80% over the same period last year. In the second quarter, the company's production and sales recovered rapidly, and the overall revenue and net profit increased steadily. Among them, the operating income in the second quarter was 1.864 billion yuan, an increase of 13.04 percent over the same period last year; the net profit attributed to shareholders of listed companies was 272 million yuan, an increase of 74.36 percent over the same period last year, and the performance in a single quarter achieved rapid growth. The net cash flow generated by the company's operating activities in the first half of the year was 126 million yuan, a substantial improvement over the same period last year, mainly due to the decrease in the purchase of materials and the increase in accounts payable during the reporting period. The company's sales gross margin in the first half of 2020 was 13.51%, a slight drop of 0.56 PCT compared with the same period last year. At the same time, the company's sales expenses, management expenses and R & D expenses in the first half of the year were 82 million yuan, 179 million yuan and 96 million yuan respectively, with year-on-year increases of 1.96%,-1.16% and-17.24%, respectively.

Rail transit and the old retrofit business continue to advance, EMU bottom inspection robot has entered the trial operation stage: the elevator industry has entered a mature period of industry, industry competition is more fierce, homogenization competition is serious. With the continuous improvement of the domestic epidemic prevention and control situation in the second quarter, and under the influence of the government's stable economic policy, the resumption of work and production has been accelerated, and the policy of market segmentation such as elevator installation and renovation has led to a pick-up in the growth rate of elevator sales. At the same time, relevant policies have increased the development and construction of rail transit system represented by high-speed rail and subway, and rail transit station facilities have become a strong growth point of elevator market demand. The Guangzhou Metro project consists of 10 lines, of which the contracts of Guangzhou Metro Line 3 East extension, Line 5 East extension, Guangzhou Metro Line 12, Line 13 Phase 2 and Line 22 are implemented by Guangri Elevator. the total contract amount of the five-line procurement (package installation) project is RMB 1.162 billion yuan. The contracts of Guangzhou Metro Line 7, Line 10, Line 11, Line 14 and Line 18 shall be executed by Hitachi Elevator. the total contract amount of the five lines procurement (package installation) project is 1.64 billion yuan. In terms of elevator equipment and parts, the company has deeply implemented the management policy of "two networks and one strategy", carried out the "Regional 64th" marketing plan, and added a number of strategic customers. the acceptance of the elevator prototype of Guangzhou Metro Line 22 has been successfully completed, and the first connecting section of University City North Station and Line 22 of Line 12 has entered the stage of production scheduling. In addition, focus on the installation of elevator business in old residential areas, in-hand contracts involving elevator equipment contract amount increased compared with the same period last year. In the modern service industry, the company closely follows up the major customers' new warehousing and trunk transportation and distribution business on the basis of ensuring the high-quality completion of signing annual contracts with existing customers for transportation, packaging and distribution. In terms of intelligent equipment manufacturing, at present, the EMU bottom inspection robot system independently developed by the company is being tested in high-speed rail systems such as Shanghai Hongqiao bullet train station, Chengdu bullet train station, Sanya bullet train operation station, Zhengzhou bullet train station, Guangzhou east bullet train station and so on.

Research and development projects are promoted in an orderly manner, and the national marketing engineering service network provides one-stop service experience: the company has nearly 50 years of elevator manufacturing history, a strong elevator research and development team and strong scientific and technological strength. During the reporting period, Guangri Research Institute established 17 technical R & D projects, including intelligent elevator key technology integration and product development, intelligent logistics platform, EMU intelligent detection system research and development, and so on. At present, each project has been effectively promoted according to the plan, among which six projects, such as building modular elevator technology and product development, EMU intelligent detection system research and development, have entered the review stage. During the reporting period, the company further established the advantages of market network and strategic cooperation, and the company's elevator national marketing engineering service network covers branches, service centers, offices and a growing dealer network. Sell Guangri brand elevators to global customers and provide engineering services, forming a wide coverage and rapid response marketing service network. The company has set up a Guangri Elevator customer Service Center, which integrates hotline center, technical support center and remote monitoring center. Relying on the Internet and Internet of things technology based on big data, the company has realized the intelligent service of elevators and escalators, reducing equipment outage time, failure rate, detailed maintenance process information, and providing customers with the most intimate and differentiated one-stop service. Realize the seamless docking of pre-sale, in-sale and after-sales service.

Investment suggestion: the company's performance grew steadily in the first half of the year, and its operating cash flow improved significantly compared with the same period last year. We predict that the EPS of the company from 2020 to 2022 is 0.56,0.61 and 0.70 yuan respectively, and the corresponding PE is 14.70,13.47 and 11.78 times respectively. Maintain the recommended rating.

Risk tips: the impact of the global epidemic continues; industry competition intensifies; orders fall short of expectations; raw material price fluctuations risk; R & D progress falls short of expectations.