The company released its 2020 semi-annual report. In the first half of the year, it achieved operating income of 1,317 billion yuan, a year-on-year decrease of 11.16%, while Q1/Q2 achieved revenue of 496/821 million yuan, respectively, -24.44%/-0.64% year-on-year. In the first half of the year, the company achieved net profit of 128 million yuan, a year-on-year decrease of 9.99%. Among them, Q1/Q2 achieved net profit of 0.29/100 million yuan respectively, a year-on-year difference of -45.72%/11.12%. In the first half of the year, the company achieved net profit of 118 million yuan, a year-on-year decrease of 1.91%. Among them, Q1/Q2 achieved net profit of 222/096 million yuan after deduction, respectively, of 37.57%/12.65% over the previous year. Domestic sales and retail sales continued to recover in Q2, and the Q2 engineering channel increased by 30.99% year on year. In the first half of the year, the company's domestic business reached 949 million yuan, a year-on-year decrease of 10.89%, of which Q1/Q2 reached 317.632 million yuan (-32.84%/+6.58%) respectively. In the domestic business in the first half of the year, retail channels reached 608 million yuan (-16.37%), of which Q1/Q2 achieved 200 million yuan/408 million yuan respectively, up -34.43%/-3.32% from the previous year. The Q2 growth rate of the engineering channel reached 30.99%, and the revenue of the 20H1 engineering channel was 341 million yuan, an increase of 0.89% over the previous year. Among them, the Q1/Q2 engineering channel achieved 117 million yuan/224 million yuan respectively, an increase of -29.94%/30.99% over the previous year. In addition, in the first half of the year, foreign business reached 368 million yuan, down 11.75% year on year, while foreign business Q1/Q2 reached 179 million yuan/189 million yuan respectively, down 2.71%/18.88% year on year. In terms of production capacity, the sanitary ceramics production line project with an annual output of 800,000 pieces of smart bathroom products in Chongqing in the first half of the year is being actively promoted. Promote new retail, optimize and adjust offline distribution stores, and expand bulk channels smoothly. 20H1's sanitary ceramics (sanitary ware) revenue was 712 million yuan, accounting for 54%, of which smart bathroom achieved 93 million yuan. In addition, in the first half of the year, the overall bathroom achieved revenue of 12 million yuan. In terms of distribution channels, the company optimized and adjusted specialty stores in the first half of the year. By the end of the first half of the year, the company had 2,831 offline stores (a decrease of 132 from the end of 19), of which 1,799 and 396 “Huida” brand bathroom/tile stores and 636 “Duffini” brand stores were respectively. In terms of engineering channels, the company promoted strategic cooperation with real estate developers such as Fuli Real Estate, Poly Real Estate, Kangqiao Real Estate, Aoyuan, Wanda, Shouchuang, etc., and also signed cooperation agreements with construction real estate companies such as Jiangsu Jinma Transportation and Xinjiang Huayuan Holdings to launch the Huida Sanitary Ware and New Infrastructure Industry Alliance to create a platform for upstream and downstream industry chain cooperation. Profitability increased slightly, and the Q1 management expense ratio and Q2 sales expense ratio increased slightly. In the first half of the year, the company's gross profit margin was 32.64%, up 0.76pct year on year. Among them, Q1/Q2 gross margin was 29.31%/34.65%, respectively, up 0.17/0.59pct year on year. In terms of cost rates, the company's sales, management, and R&D expenses in the first half of the year were 9.72%/6.61%/4.02%, respectively, up 0.88pct, 1.14pct, and 0.45pct year on year. Among them, the Q2 sales expense ratio increased 1.76 pct year on year, and the Q1 management cost rate increased 3.58 pct year on year. Overall, the net interest rate on the profit side was 9.72%, down 0.07pct from the previous year due to falling Q1 revenue and expenses. Among them, the Q1/Q1 net interest rate was 5.85%/12.18%, respectively, and -2.23pct/+1.3 pct year-on-year respectively. We expect the company to have a net profit of 350 million/405 million/469 million in 20-22, with a growth rate of 6.42%/15.80%/15.63% respectively. The corresponding PE is 17X/15X/13X respectively, maintaining the “increased holdings” rating. Risk warning: increased competition in the industry, the risk of the escalation of the overseas epidemic, the completion of housing delivery in the industry fell short of expectations, etc.;