The company released an interim report that it achieved revenue of 326 million yuan in the first half of the year, a year-on-year decrease of 17.44%, and the net profit of Gwimo was 59.85 million, an increase of 2.96% over the previous year, after deducting net profit of 48.68 million, a year-on-year decrease of 5.09%. The Q2 quarterly revenue was 237 million, a year-on-year decline of 7.72%, which was significantly narrower than in the first quarter. Considering the high profit base of Q2 revenue last year and delays in project progress and acceptance in the context of this year's epidemic, performance is improving quarterly. 20H1 net profit is already 77% of the full year of 2019. Combined with the acceleration of on-hand and new orders, performance is expected to accelerate significantly in the second half of the year, upgraded to the “Highly Recommended - A” rating.

New orders continued to grow rapidly, and prepaid accounts increased 43.6% year over year. It was announced that nearly 700 million new orders were added in the first half of the year, an increase of 56% over the previous year. Judging from July to August, it continued to grow relatively rapidly from the peak season in the past. The company adopted the 3331 collection model. The advance accounts (contract liabilities) reflect the current order situation. Q1/Q2 received 174 million/145 million dollars in advance, up +28.8%/+43.6% from the same period last year. The most obvious contribution to order growth was the integration of intelligent manufacturing systems increased by 168%, and the medical and pharmaceutical industry increased by 1237% over the same period. It is expected that as the trend of intelligent transformation of factory logistics increases and profits and industry sentiment of major pharmaceutical and medical customers remain high, it will bring about sustainable orders.

Cash flow has improved dramatically, and there is sufficient cash on the account. Net operating cash flow in the first half of the year was 54.11 million, compared to a net outflow of 30.71 million in the same period last year. There was a significant improvement. Mainly due to intensive sales repayment work, the company's accounts receivable of 289 million decreased by 60 million compared to the same period, and the increase in accounts payable. On the balance sheet, monetary capital is 164 million, and wealth management products that include transactional financial assets and other current assets are still $320 million. Cash flow risk is low.

The Ma'anshan plant was put into use in the second half of the year, breaking through production capacity bottlenecks to support business expansion. The company's on-hand orders have now reached saturation. The original Nanjing Jingjiangning, Nanjing Lishui, Chongqing and Tianjin had a total production capacity of more than 90,000 tons. The Ma'anshan plant will soon be put into operation. The first phase will add 60,000 tons of production capacity. As the company's largest production base in China and a model plant for intelligent production, it will be further expanded later.

The actual controller changed, and orders and operations ushered in an upward inflection point. In June, the controlling shareholder of the company was changed to Tao Culture and Tourism Group. The actual controller is the Jingdezhen State-owned Assets Administration Commission. Relying on the financial strength of the new majority shareholders and local support for the intelligent manufacturing industry, the company is expected to receive relatively definite incremental orders in the fields of ceramics and agricultural products cold chain. In line with the accelerated trend of new orders that the company has shown in the first half of the year, we believe that the company will usher in an upward inflection point in its performance this year. The launch of new production capacity next year will support the company's business to the next level. The 20-21 results are 110 million and 150 million, the valuation is 29/22 times, and there is a possibility that it will exceed expectations, and it will be upgraded to the “Highly Recommended - A” rating.

Risk warning: Competition in the intelligent storage equipment industry intensifies; revenue confirmation from large-scale projects causes performance fluctuations; new business expansion falls short of expectations; fluctuations in upstream raw material costs have an impact on profitability.