In 2020, Yuanda Housing focused on developing the 2C business through a strategic transformation of To B+ To C two-wheel drive. By analyzing the policy environment of the rural housing market, the situation of country house competitors, the company's 2C product advantages, marketing models, etc., we believe that the 2C business will open up a new growth pole for the company. The reform of the homestead system invigorates the trillion-dollar space of the rural self-built housing market. According to the “White Paper on Consumption Data and Development of China's Rural Self-built Housing Industry,” about 5 million farm houses are built or reconstructed every year in China. We predict that over the next 5-10 years, by organizing homesteads, landless farmers could eventually form a market capacity of 5 trillion yuan (129,000 yuan/household* 1.02 million households+920,000 yuan/household+920,000 yuan/household* 28.54 million households) in terms of housing construction for landless farmers. On a ten-year basis, the average rural housing market size is about 500 billion yuan per year. Competitors in the townhouse market each have advantages in segmentation fields. We selected 4 representative townhouse enterprises for comparative analysis. Among them, Baojia Township and Yuanshujia are traditional enterprises, while Villa Factory and Huachuang Meijia are prefabricated construction enterprises. In terms of common advantages, they all have the characteristics of standardized product assembly and delivery, a complete supply chain system, and delivery methods that do not require advance funding. The four enterprises have their own competitive advantages in segmented fields. For example, Baojiaxiangshu has developed the richest and most diverse townhouse products in the industry with its design strength; Yuanshujia introduced the aluminum mold process into the traditional structural system of Shuxiang for the first time, greatly improving the construction speed and quality of traditional concrete structures; the villa factory is the first townhouse enterprise with heavy steel structures, which have advantages such as fast construction speed of steel structures, good environmental effects, and labor cost savings; Huachuang Meijia uses fully bolted prefabricated concrete structures (BPC), which has a high degree of industrialization and less on-site casting workers, More environmentally friendly. A new generation of Yuanda Meijia products was released, and the scale is expected to grow rapidly. In 2020, the company will focus on developing C-side business and establish a B2C module integration technology division, which is mainly responsible for Yuanda Meijiao and the new product B-BOX. Among them, Yuanda Meijiao products mainly target C-end consumers and target the country house market. Five standardized products have been sold this year. We believe that in addition to having the advantages of other representative townhouse enterprises, Yuanda Meizhai also has competitive advantages in terms of intelligent manufacturing, factory layout, construction speed, technical level, and customer types. It is expected that the company will develop rapidly in the prefabricated townhouse segment. In the future, the product type design can satisfy the entire market. In the long run, it is expected that the scale will not be lower than the 2B business. We forecast that the company's 2C business scale (excluding B-BOX) will reach 5.25 billion yuan in the next 3 years, providing the company with considerable performance growth. Pioneering the online and offline Internet+marketing model, Yuanda Meizhai currently uses a marketing model combining offline 4S stores and online beauty house cloud generation. Among them, offline 4S stores take advantage of “experiential marketing” and combine the characteristics of 4S dealers with rich local resources to efficiently accelerate the penetration of Yuanda Meimei Real Estate products into the local market; Meizhai Cloud creates an online business agent mechanism with functions such as recommendation, sales, and rebates, and is suitable for scattered housing construction customer groups, similar to the emerging UGC content+social marketing model in the era of big data, breaking the early transmission relationship in the marketing communication process. We believe that the combined marketing model of the two will facilitate the rapid promotion of YuandaMei Real Estate products in the future. B-BOX creates high-end residential space products, and domestic and foreign markets develop in parallel. B-BOX products newly developed in 2020 use high-tech silicon-based composites. The material strength is 5 times higher than that of ordinary concrete, and the structural weight is lighter than water, making it easy to transport. In terms of product positioning, it can be used in country houses, tourist resorts, creative office space, beautiful rural construction, ecological cultural tourism towns, coffee shops, bookstores, etc. Currently, domestic and foreign markets are developing in parallel, and it is expected to become another heavyweight product in rural or overseas regions in the future. Investment recommendations We expect that Yuanda Meijiao will have a lot of room for growth. In the future, product type design can satisfy the entire market. At the same time, the new product B-BOX may become another heavyweight product in rural or overseas regions in the future. In the long run, the 2C business scale is expected to be no less than the 2B business. Moreover, from the perspective of business operations, the 2C business has better controllability and guarantees better cash flow and receivables. Considering that the 2C business will greatly boost the company's performance in the future, we adjusted the 2020-2022 EPS from 1.81, 2.17, and 2.60 yuan/share to 1.81, 2.37, and 3.30 yuan/share, giving the company a 2020 valuation of 19.86 times PE. The target price is 35.96 yuan (corresponding to HK$41.09), maintaining the “buy” rating. Risk warning: State-owned enterprises have entered the prefabricated field to compete with companies; homestead system reforms have fallen short of expectations; promotion of Yuanda Meimei's housing business has been blocked; and B-BOX's overseas business has been blocked due to the epidemic.