Event: Shanghai Electric released its 2020 semi-annual report results. There was a slight increase in performance after deduction, and gross margin increased slightly over the same period last year. According to the company's semi-annual report, the company achieved revenue of 53.237 billion yuan in the first half of the year, an increase of 0.53% over the previous year, realized net profit attributable to the parent company of 1,522 billion yuan, a year-on-year decrease of 17.57%, and realized net profit attributable to the parent company after deduction of 1,347 billion yuan, an increase of 0.09% over the previous year. From a profit perspective, the company's gross margin for the first half of the year was 19.18%, up 0.1 pcts year on year. Thermal power revenue and new orders have declined, the new energy sector has entered rapidly, and the gross margin of the energy equipment sector increased by 2.1 pcts year-on-year in the first half of the year. In the first half of this year, the coal-fired power generation business achieved revenue of 5.974 billion yuan, a year-on-year decline of 22.9%, while the share of revenue from new energy businesses such as wind power continued to rise. In the first half of the year, the energy equipment sector achieved revenue of 19.292 billion yuan, an increase of 2.3% over the previous year, a gross profit margin of 18.1%, and an increase of 2.1 pcts over the previous year. Nuclear power construction is picking up, and the company's nuclear power orders increased by 245% year on year; the wind power sector actively maintained its leading edge, with new orders growing more than 500%, and the total number of fans connected to the “Fengyun” system exceeded 3,000. Since 2019, the nuclear power project has been steadily restarted. In the first half of this year, the company's new nuclear power orders reached 2.69 billion yuan, an increase of 244.8% over the previous year. In August, according to information from the company's official public account, the company and China Nuclear Power signed a procurement contract for steam turbine generator sets for Tianwan Units 7 and 8 and Xudabao Units 3 and 4. With the steady restart of nuclear power projects, the company's nuclear power sector is expected to accelerate recovery. Companies in the wind power sector continue to maintain their leading edge. In the first half of the year, the company added 33.96 billion yuan of wind power orders, an increase of 505.8% over the previous year; of these, additional offshore wind power orders were added 24.91 billion yuan, an increase of 707.3% over the previous year. At the same time, the wind power big data remote management platform “Fengyun” system launched by the company has now been connected to more than 100 wind farms and more than 3,000 fans. The company's wind power sector is developing software and hardware at the same time, gradually transforming from a fan manufacturer to a service provider for the full life cycle of wind power. Promote the intelligent transformation of combustion engine power plants, actively explore service markets, and lead the localization of large-scale domestic gas turbines. As of the first half of 2020, the company has signed long-term service orders for 11 projects and 22 gas turbines to actively explore the service market. At the same time, the company has established an intelligent platform to provide customers with digital intelligent solutions for gas turbines. In the first half of this year, the company and Jingneng Group signed a contract for the development of an intelligent optimization system for part load performance of E-class combustion engines, which is expected to help power plants save fuel costs and promote combustion engine power plants to achieve the goal of smart power plants. The company is a leader in the localization of large-scale gas turbines in China and accelerates the localization process of combustion engine turbines. The energy storage sector is developing vigorously. The new 5GWh production capacity at the Nantong plant is about to be put into operation. Testing of long-life batteries has begun, and the cycle life is planned to be 8000 times. Beginning in 2012, the Shanghai Electric Central Research Institute began to lay out energy storage business. In 2017, the company and Guoxuan Hi-Tech set up a joint venture to establish Shanghai Electric Guoxuan New Energy to officially enter the energy storage lithium battery field, mainly laying out the entire industry chain layout of key battery materials, batteries, battery management systems and system infrastructure. In recent years, the company has undertaken projects including the Qinghai Golmud grid-side shared energy storage power plant project with innovative models and the Anhui Jinzhai Electrochemical Independent Energy Storage Demonstration Project to vigorously develop the energy storage sector. According to the company's official public account news, the company's energy storage system production base in Nantong was designed to produce 10 GWh per year and was completed in two phases. The first phase of the project is 5 GWh and is expected to be officially put into operation in October. At the same time, the company has begun testing work on long-life batteries, with a planned cycle life of 8000 times to accelerate the reduction of energy storage costs. Accelerate the layout of the automation field, with orders increasing by more than 470%. In recent years, the company has accelerated the deployment of the automation sector. In the first half of this year, the company has successively won bids for the Ningbo Xinzhou Sewage Treatment Plant Phase II project automation and mechatronics integrated installation and commissioning project, the Taizicheng Ice and Snow Town Streetcar EPC Project in the Zhangjiakou Chongli Olympic Division, the Nanchang Metro Line 4 Phase I Project Signal System Integration Project, the Zhengzhou Metro Line 6 Phase I Signal System Integration Project, and the Jiaxing Streetcar Phase I Project. In the first half of 2020, the company's automation engineering and service orders reached 2.43 billion yuan, an increase of 473.7% over the previous year. Performance forecast: The company is expected to achieve revenue of 1404.97/1594.86/175.434 billion yuan from 2020 to 2022, and achieve net profit attributable to the parent company of 39.82/45.21/50.24 billion yuan, an increase of 13.7%/13.5%/11.1% over the previous year, corresponding to PE 21.1/18.6/16.7 times, maintaining the “buy” rating. Risk warning: wind power industry installed capacity falls short of expectations; thermal power demand falls short of expectations; forecast deviation and valuation risk.