Net profit to mother fell 15.87% year-on-year in the first half of the year. Offsite expansion continued to push forward the company's 2020 semi-annual report. 20H1 achieved revenue of 870 million yuan, -6.83% year over year, and realized net profit of 96 million yuan, -15.87% year on year; realized net profit withheld from non-mother of 94 million yuan, -16.07% year on year. The company achieved revenue of 31/550 million yuan in 2020, respectively, -26.1%/+9.2% year on year; achieved net profit to mother of 0.30/66 million yuan, -47.0% year on year /+14.9%, Q2 revenue and net profit rebounded year over year. The company's net cash inflow from operating activities in the first half of the year was 65 million yuan, which was a marked improvement compared to the net outflow of 0.3 million yuan in the same period last year. The commissioning of the company's Henan base and Hainan and Yunnan bases in 20-22 will push the company into a new development cycle, maintain the company's 20-22 EPS forecast of 0.92/1.18/1.48 yuan, and maintain a “buy” rating. Fierce price competition led to a decline in the company's revenue. The market share in the southwest region accelerated, and the company's PVC/PPR/PE series product revenue in the first half of the year was 6.8/1.0/0.86 billion yuan, respectively, +0.63%/-9.67%/-38.29% year on year. Apart from PVC product revenue, PPR and PE products both declined. We expect that due to the epidemic, industry competition is fierce. The company took price reduction measures to speed up shipment and seize market share. Looking at the subregion, revenue in South China, the company's main region, fell 7.0% year on year, but the subsidiary Guangxi Xiongsu achieved revenue of 380 million yuan, an increase of 8% year on year; revenue in the southwest region increased sharply by 53.4% year on year, accounting for a 2.5-pct year-on-year increase, indicating that the company's offsite expansion has further accelerated. The company continues to push forward the investment and construction of Hainan and Yunnan subsidiary projects. The Hainan base is expected to be put into operation by the end of the year, and the market share in the southwest region is expected to increase further. Gross margin remained flat year on year, and operating cash flow improved markedly. The company achieved a comprehensive gross profit margin of 25.4% in the first half of the year, with a slight decrease of 0.5 pct. Among them, the gross margin of PVC/PPR/PE series products was 24.5%/31.9%/24.4%, respectively, down 0.7/0.4/0.7 pct year on year. We estimate that PVC/PPR/PE raw material prices fell 8%/15%/19% year on year, respectively, in the first half of the year, but the company lowered prices simultaneously, and cost elasticity was not shown. In the first half of the year, the company's expense ratio was 13.5%, a slight increase of 0.8 pct over the previous year. Among them, the management expense ratio increased 0.7 pct year over year, mainly due to a large increase in depreciation expenses. Overall, the company's expense control is still excellent. The company's net operating cash flow in the first half of the year was 65 million yuan, which was a significant improvement over the net outflow of 0.3 million yuan in the same period last year, and the revenue ratio increased 6.5 pct to 107.1% over the same period last year. Maintaining profit forecasts and maintaining a “buy” rating, Xiongsu Technology is one of the largest comprehensive suppliers of plastic pipelines in China with a production capacity of 200,000 tons or more in a few years. The company's active market expansion in the first half of the year caused temporary pressure on revenue and profits. However, we believe that the company's financial statements were excellent. The balance ratio for the first half of the year was 21.9%. There is still plenty of room for leverage in the future, and the company continues to promote off-site production capacity. The market share is expected to increase steadily. Maintain the company's 20-22 net profit forecast of 2.8/36/450 million yuan. Currently, comparable companies correspond to the 20-year Wind consensus average of 26.8xPE. Considering that the company's size advantage and market share is not as good as comparable companies, we approve giving the company 20 xPE for 20 years, with a target price of 18.40 yuan (before adjustment of 16.56-18.40 yuan) to maintain the “buy” rating. Risk warning: Prices of raw materials have risen sharply, new production capacity cannot be digested in a timely manner, and industry competition has intensified.