Event Overview Zhengrong Real Estate released its 2020 semi-annual report. The company achieved operating income of 14.54 billion yuan in the first half of the year, +6.5% year-on-year; net profit of 880 million yuan, -6.2% year-on-year. Performance declined slightly, and profit levels were stable. In 2020H1, the company achieved operating income of 14.54 billion yuan, up 6.5% year on year; net profit was 880 million yuan, down 6.2% year on year. During the reporting period, the company's return on net assets, gross sales margin, and net sales margin were 5.21%, 20.31% and 8.76% respectively, down 1.48pct, 0.01pct, and up 0.12pct from the same period last year. The company's overall profitability remained stable under the influence of the epidemic. Resilient sales and steady investment 2020H1 achieved sales volume of 562 billion yuan, down 4.5% year on year; sales area was 3.655 million square meters, down 4.0% year on year. Under the influence of the epidemic, the company's sales scale declined slightly. The company added a planned construction area of 3,023 million square meters, an increase of 4.2% over the previous year; the corresponding land acquisition amount was 17.78 billion yuan, a decrease of 2.1% over the previous year. The company's land acquisition amount accounted for 31.8% of the current sales amount, an increase of 0.8 pct compared to the same period last year, and investment remained steady. The leverage ratio was optimized. As of the end of the reporting period, the company's balance ratio and net debt ratio were 82.73% and 90.18%, respectively, up 1.08 pct and 7.36 pct from the end of 19, and the leverage ratio was optimized. Furthermore, during the reporting period, the company's new financing costs in domestic and foreign markets all declined, and the weighted average financing cost fell further to 7.0%. The investment suggests that Zhengrong Real Estate's performance has increased steadily, sales have continued to grow, land storage layout has been optimized, and the financial situation is stable. We expect the company's EPS for 20-22 to be 0.69/0.82/1.05, and the corresponding PE is 5.8/4.9/3.8 times (1 Hong Kong dollar to 0.8827 yuan), covering the first time, giving the company an “increase in holdings” rating. Risk indicates that sales fall short of expectations, and preparation for inventory impairment affects performance