Incident: The company announced the signing of the “Financial Services Framework Agreement” with China Railway Finance Company. The comments on this are as follows: The company signed a financial services framework agreement with China Railway Finance Company. The total credit balance obtained is not more than 2.5 billion yuan, which is valid until the end of 2022. In order to optimize financial management, improve the efficiency of capital use, broaden financing channels, reduce financing costs, and diversify financing risks, the company plans to sign a “Financial Services Framework Agreement” with China Railway Finance Corporation. According to the financial services framework agreement, the financial company will provide a series of financial services to the company within the scope of operations, including but not limited to financial services such as deposit services, comprehensive credit, financial and financial advisory, and internal transfer and settlement services. Due to financial risk control and transaction rationality considerations, the following restrictions have been imposed on financial services transactions between the two parties: the maximum deposit balance (including accrued interest) held by the company in China Railway Finance Company shall not exceed RMB 1 billion; the comprehensive credit balance obtained by the company from China Railway Finance Company shall not exceed RMB 2.5 billion. The company received cash from loans in 2018, 2019, and the first half of 2020 was 550 million yuan, 70 million yuan, and 570 million yuan respectively, and the company's balance ratio at the end of June 2020 was 47%. The company received credit from China Railway Finance Corporation, which is expected to strengthen the company's financing capacity. On July 14, the controlling shareholder of the company changed to China Railway; on August 20, the company's abbreviation was changed to China Railway Assembly, and a new general manager was appointed. On July 14, 2020, the subject shares transferred by the agreement on the change of control have completed the transfer procedure, and the controlling shareholder of the company was changed to China Railway. On August 1, 2020, the company announced that it intends to change the company's abbreviation to China Railway Assembly. On August 20, the company abbreviation change was completed. On the same day, the company appointed Mr. Sun Baoliang, the new general manager. From April 2014 to July 2020, Mr. Sun Baoliang served as Deputy General Manager and Financial Director of China Railway Real Estate Group Co., Ltd. National policies have put forward higher development goals for prefabricated development, and relevant policies have been introduced one after another. In 2016, the General Office of the State Council's “Guiding Opinions on Vigorously Developing Prefabricated Buildings” clearly stated that prefabricated buildings should be vigorously developed and that prefabricated buildings should account for 30% of the newly built construction area in about 10 years. In 2017, the Ministry of Housing and Construction issued the “13th Five-Year Plan” for prefabricated buildings, proposing that by 2020, prefabricated buildings will account for more than 15% of newly built construction in the country, with key promotion areas reaching more than 20%. In 2019, the Ministry of Housing and Construction's “Notice on Issuing Key Work Points of the Construction Market Supervision Department of the Ministry of Housing and Urban-Rural Development in 2019” proposed “launching a pilot project for steel structure prefabricated housing construction”. This is the first time that a prefabricated construction policy has proposed a steel structure pilot project. In the first half of the year, the Ministry of Housing and Construction issued the industry standard “Technical Standards for the Inspection of Prefabricated Residential Buildings”, which has been implemented since June 1, 2020. The standardization of the industry and the improvement of prefabricated standards are conducive to the development of technology-leading enterprises in the industry. In July 2020, 13 departments including the Ministry of Housing and Construction jointly issued the “Guiding Opinions on Promoting the Collaborative Development of Intelligent Construction and Construction Industrialization”. The opinions mentioned that the construction industry is a pillar industry of the national economy, providing strong support for the sustainable and healthy development of China's economy. Investment advice: Maintain an increase in holdings rating. The company's net profit from 2020 to 2022 is expected to reach 0.82, 1.08, and 143 million yuan respectively, up 22%, 32%, and 32% year on year, corresponding to price-earnings ratios of 50, 38, and 29 times. The prefabricated construction industry is currently supported by policies, and the industry is in a period of high growth. The company's production base in Suqian, Jiangsu was successfully put into operation in the first half of 2019, improving production capacity layout. The company's technology and ability to receive orders are strong; after the controlling shareholder becomes China Railway, it is expected that business collaboration will be achieved. Risk warning: Policy support for the prefabricated construction industry falls short of expectations; industry competition intensifies; downstream demand for prefabricated construction falls short of expectations; raw material cost growth is higher than expected; business support brought to the company by China Railway falls short of expectations; impairment losses or intensification of assets such as bad debts.