Key investment points: Hangmin Co., Ltd.: Focus on the development of the “textile printing+gold jewelry” dual business. The company's main business is printing and dyeing and gold jewelry, and has formed a stable and efficient industrial chain supporting the development of thermoelectricity, weaving, nonwovens, and shipping logistics. The various economic and technical indicators of the company's main business, such as textile printing and dyeing, are at the leading level in the same industry. In 2019, the company achieved operating income of 6.694 billion yuan, a year-on-year decrease of 11.14%, and achieved net profit of 737 million yuan to mother, an increase of 11.34% over the previous year. Overcoming the two-way impact of declining exports and the expansion of new production capacity in Shaoxing, the main printing and dyeing industry remained stable. The company's printing and dyeing industry is mainly engaged in dyeing, printing and finishing of various medium and high grade cotton, hemp, T/C, corduroy, polyester cotton, polyester wool and various chemical fiber fabrics or interwoven fabrics, with an annual processing scale of 1.02 billion meters. The company is a qualified supplier for high-quality domestic clothing brands as well as international brands H&M, ZARA, M&S, Wal-Mart, VF, etc. Despite the impact of the COVID-19 pandemic this year, the textile and garment industry is serious and complex, the fundamentals of the long-term improvement of the industry have not changed. It is still in a period of important strategic opportunity. It has many positive factors and significant advantages in adapting to the new “double cycle” development pattern — a complete industrial system, a huge domestic demand market, an active digital economy, and weak scientific and technological innovation. The completion of the asset restructuring and acquisition of Hangmin Baitai is expected to benefit from the release of consumer demand for gold and jewelry in China. The company completed a major asset restructuring in 2018 and purchased 100% of its shares in Hangmin Baitai Company through a private offering of 110 million shares to Hangmin Group and Huanguan Jewelry. The transaction price was 1.07 billion yuan. After the transaction is completed, Hangmin Baitai became a wholly-owned subsidiary of the company. Affected by the continuous increase in China's per capita disposable income, the full liberalization of second-child births, the continued prosperity of the wedding market, the rejuvenation of consumer groups, and consumption upgrades in third- and fourth-tier cities, China's gold and jewelry consumer demand will continue to be released. In the context of a market where the concept of “big consumption” continues to heat up, the company focuses on the development of the “textile printing+gold jewelry” dual business. We believe that the company will benefit from this. The increase in the controlling shareholders' holdings shows confidence in the company's future development. Hangmin Group, the controlling shareholder of the company, increased its holdings of the company's shares by about 15 million shares within 6 months between November 7, 2019 and April 30, 2020, accounting for 1.39% of the company's total issued shares, and promised not to reduce its holdings of the company's shares during the implementation of the increase plan and during the statutory period. After the increase in holdings was completed, Hangmin Group held 412 million shares of the company, accounting for 38.12% of the total shares issued. The increase in shares is based on Hangmin Group's confidence in the company's continued stable development in the future and recognition of long-term investment value. Profit forecast. We expect the company's 2020-22 EPS to be 0.59 yuan, 0.71 yuan, and 0.80 yuan respectively. The valuation of companies in the contract industry is comparable. We believe that a reasonable valuation is 9.5-11 times PE in 2021, corresponding to a reasonable value range of 6.75-7.81 yuan. For the first time, it covered an investment rating of “superior to the market”. Risk warning. The risk of gold price fluctuations, insufficient demand for main products, and a decline in the macroeconomy.