Event: the company's income in the first half of 2020 was 362 million yuan, down 24.19% from the same period last year, and the net profit was 49 million yuan, up 4.45% from the same period last year. Previously, the company predicted that the net profit of returning home in the first half of the year would be 0.47-56 million yuan, an increase of 0.94 percent 20.26 percent over the same period last year.

Affected by the epidemic, income declined in the first half of the year, the increase in gross profit margin and good cost control led to a positive growth in net profit. The company's revenue declined in the first half of the year, mainly because the progress of project implementation was affected by the epidemic situation of COVID-19, and the number and amount of projects confirmed decreased compared with the same period last year. Due to the epidemic, the company's first-quarter revenue and return net profit decreased by 83.63% and 145.26% respectively compared with the same period last year. In Q2 alone, the company's revenue increased by 108.36% compared with the same period last year, and the return net profit increased by 721.74% compared with the same period last year. From a sub-industry point of view, the projects that confirmed revenue in the first half of the year mainly came from tobacco, new energy and petrochemical industries, accounting for a total of 97.88%, of which the tobacco industry earned 101.7507 million yuan, accounting for 28.14%; the new energy industry 131.791 million yuan, accounting for 36.44%; and the petrochemical industry 120.4138 million yuan, accounting for 33.30%. In the first half of the year, the income scale of the three downstream industries was relatively balanced, and the revenue contributions of the tobacco and new energy industries, which had traditional advantages, continued to remain stable. In recent years, the revenue contribution of the petroleum and petrochemical industry, which focused on expansion, gradually appeared. The gross profit margins of the tobacco, new energy and petrochemical industries in the first half of the year were 42.15%, 30.40% and 31.24%, respectively. The gross profit margin of the tobacco industry which has been ploughed for many years is significantly higher than that of other industries. In the first half of the year, the gross profit margin of sales was 34.13%, 5.8pct higher than that of the same period last year; sales and administrative expenses decreased by 5.95% and 3.85% over the same period last year; and the net profit rate was 13.45%, an increase of 3.69% over the same period last year. The net cash flow of operating activities was-91 million yuan in the first half of the year and-140 million yuan in the same period last year. According to previous years' experience, the company's collection is usually concentrated in the second half of the year.

Increase sales of digital products and actively explore new business models: in the first half of the year, the company added 360 million yuan of new orders (including tax), mainly from tobacco, new energy, petrochemical and employment industries, which increased by 0.62,1.26,0.86 and 64 million yuan respectively. As of the first half of the year, the revenue order (including tax) has not yet been confirmed at hand. In addition, the company has stepped up its research and development and promotion of digital products and achieved good market results. Sales orders for digital products such as cloud WMS and 3D digital twin systems have exceeded 10 million yuan. The company is also actively exploring new business models. Budweiser project is not only the first order of the company in the wine industry, but also the first order of the company's intelligent system leasing business model, which has a good demonstration effect on the future market expansion.

Investment suggestion: the revenue from 2020-2022 is estimated to be 841-11.41 billion yuan, the net profit from 2020-2022 is 0.61-0.94 billion, the EPS is 0.22-0.34-0.52, and the current price corresponding to PE is 50-33-22 times. Maintain a "buy" rating.

Risk hint: project implementation is affected by the epidemic.