The performance was in line with expectations, and the operating cash flow improved significantly compared with the same period last year: the company's operating income in the first half of 2020 was 326 million yuan, down 17.44% from the same period last year; and the return net profit was 598.458 billion yuan, up 2.96% from the same period last year. Of this total, Q2 realized operating income of 237 million yuan, down 7.72% from the same period last year, and realized net profit of 41.1804 million yuan, down 5.84% from the same period last year. Affected by the epidemic in the first half of the year, some projects could not enter the site for installation and commissioning, and the progress of the project was affected. in addition, there were more system integration projects in this period, the debugging operation and acceptance cycle was longer, and the performance in this reporting period was under pressure. The net cash flow generated by operating activities in the first half of the year was 54.1138 million yuan, an increase of 276.18% over the same period last year, mainly due to the strong sales rebate work of the salesman in this period and the obvious payback effect. The company's gross profit margin for the first half of the year was 30.04%, down 8.11 pct from the same period last year. The sales expenses in the first half of the year were 12.5445 million yuan, down 65.50% from the same period last year, mainly due to the adjustment of installation and transportation costs related to the project from sales expenses to project costs according to the new revenue criteria; the management expenses were 11.3208 million yuan, which was basically the same as last year; the financial expenses were 80000 yuan, an increase of 147.89% over the same period last year, due to the payment of interest on short-term bank loans in the current period, but there was no such expenditure in the same period last year.

Orders in hand are abundant, and orders in the medical and pharmaceutical industry are expected to continue: by the end of the reporting period, the company's new orders in 2020 were nearly 700 million yuan, an increase of 56.15% over the same period last year. The main sources of orders are intelligent manufacturing system integration, logistics system integration, medical and pharmaceutical industry, agricultural products and cold chain industry, of which intelligent manufacturing system integration orders increased by 167.87% over the same period last year. The order volume of logistics system integration increased by 46.44% compared with the same period last year. During the reporting period, the order volume of the medical and pharmaceutical industry increased by 1236.71% compared with the same period last year, mainly due to the demand for epidemic prevention equipment blowout in the short term, and the warehousing demand brought about by the rapid production and expansion of the industry; in the long run, medical protective equipment represented by masks and gloves are expected to become daily protective equipment, and the market demand of the medical and pharmaceutical industry will maintain a rapid growth rate in the future, bringing continuous orders for the company.

With the coordinated development of the controlling shareholder and the company in many fields, the commissioning of the Maanshan plant will solve the capacity bottleneck:

During the reporting period, the control of the company was changed, the controlling shareholder was changed to Jingdezhen Taowen Travel Group, and the actual controller was changed to Jingdezhen SASAC. The company and the controlling shareholders will give full play to their respective advantages and form a joint force and synergy in the areas of warehousing equipment, warehousing and logistics operation services, vocational education and training. The company announced in the semi-annual report that the Maanshan factory is about to be put into production, which is the company's largest production base in the country, mainly producing intelligent storage equipment. After the project is completed and reached production, it will produce 2000 sets of AGV/RGV shuttle vehicles, 150000 tons of high-precision shelves and 12 million plastic sprays. In recent years, the annual capacity utilization rate of the company and its subsidiaries has exceeded 95%, and the capacity is saturated. The commissioning of the Maanshan plant will solve the capacity bottleneck that has plagued the company for many years and promote the rapid development of the company's business.

Investment advice: the company's first-half performance is in line with expectations, there are plenty of orders on hand, and the controlling shareholder and the company have synergy in many fields. The commissioning of the Maanshan plant will solve the bottleneck of the company's production capacity and is optimistic about the long-term development of the company. We predict that the EPS of the company from 2020 to 2022 is 0.28,0.34 and 0.39 yuan respectively, and the corresponding PE is 38.58,32.10and 28.03times, respectively. Maintain the recommended rating.

Risk tips: the impact of the global epidemic continues; macroeconomic cyclical risk; orders are lower than expected; raw material price fluctuation risk; bad debt risk of accounts receivable.