20Q1-Q3 's revenue is + 19.1% compared with the same period last year, and its net profit is + 7.4% compared with the same period last year. The increase in work expenses is a drag on profit performance, and the annual revenue and profit is expected to grow synchronously. The gross profit margin has declined, the cost control has been excellent, and the operating cash flow has returned to positive. In-hand orders to provide performance guarantee, the fourth quarter may usher in a dense winning bid. Profitability and profit quality continue to improve, and high-quality growth is gradually verified. Taking into account the influence of the regulation and control policy of the three red lines of real estate and the increase in the cost of catching up with work after the epidemic has been brought under control, we slightly reduce our net profit forecast for 2020-2022 to 2.2pm 30pm (the original forecast is 2.4pm), corresponding to the EPS forecast of 1.46pm 1.96pm 2.56 yuan, and the current price corresponding to PE38x/28x/22x. We maintain the company's target price of 62.49 yuan (corresponding to 32x PE in 2021) and "buy" rating.

20Q1-Q3 's revenue is + 19.1% compared with the same period last year, and its net profit is + 7.4% compared with the same period last year. The increase in work expenses is a drag on profit performance, and the annual revenue and profit is expected to grow synchronously. The company's 20Q1-Q3 revenue is 1.85 billion yuan (year-on-year + 19.1%), gross profit is 260 million yuan (year-on-year + 4.5%), and home net profit is 160 million yuan (year-on-year + 7.4%). In a single quarter, 20Q3 revenue / net profit is + 15.5% Universe 3.0%. The profit growth rate is lower than the income growth rate, which is mainly due to the increase in expenses during the accelerated delivery and rush-up period of some 3Q20 projects; as the fourth quarter enters the traditional construction season and settlement peak, we expect profit growth to be better than revenue growth, and full-year net profit and income are expected to grow synchronously.

The gross profit margin has declined, the cost control has been excellent, and the operating cash flow has returned to positive. The company's 20Q1-Q3 gross profit margin was 14.1%, down from the same period last year. We believe that it is mainly due to the increase in expenses during the rush period of the project, the company's efforts to expand new markets and the high cost of pre-running-in. The expense rate during 20Q1-Q3 is from-0.5pct to 3.8%, of which the sales / management / R & D / financial expense rate is 0.6%, 2.6%, 0.4%, 0.2%, year-on-year-0.1/-0.2/+0.1/-0.3pct, and the cost control is excellent under the influence of the epidemic. In terms of cash flow, the net inflow of operating cash was 15.42 million yuan (the net outflow of 1H20 affected by the epidemic was 58.32 million yuan), and the operating cash flow returned, reflecting the company's excellent payback ability; the net outflow of investment cash was 88.3 million yuan (the net inflow was 27.07 million yuan in the same period last year), mainly due to the increase in the purchase of wealth management products The net inflow of fund-raising cash was 700 million yuan (compared with a net outflow of 65.69 million yuan in the same period last year), mainly due to the large amount of funds raised by the IPO in June this year.

In-hand orders to provide performance guarantee, the fourth quarter may usher in a dense winning bid. The company 3Q20 newly signed order 440 million yuan, has won the bid unsigned order 960 million yuan; as of 3Q20, has signed unfinished orders of 3.46 billion yuan, in-hand orders / 2019 operating income ratio of 1.4x, on-hand orders to provide a guarantee for revenue and profit growth. In addition, under the influence of the epidemic, the proportion of owners adopting the strategic agreement mode of bidding this year is lower than that of previous years, and the proportion of ordinary tendering and bidding is expected to pick up; considering that the orders of the ordinary bidding mode are mainly concentrated in the fourth quarter of each year, we expect the company to usher in intensive winning bids in the fourth quarter, which will boost the follow-up performance growth.

Profitability and profit quality continue to improve, and continue to achieve high-quality growth. 1) in terms of profitability, the net interest rate of 20Q1-Q3 is 8.4%, of which the net interest rate of 3Q20 is 8.8%, which is 1.1 pcts lower than that of the same period last year, increasing 0.6pct month-on-month, gradually overcoming the impact of the epidemic, and profitability rising steadily as scheduled. 2) in terms of profit quality, the company's 20Q1-Q3 cash-to-cash ratio is 90.8%, an increase in 4.9pcts over the same period last year, an 8.1% increase in 1H20 compared to the same period last year, a month-on-month increase in 1H20, a weighted average ROE of 14.9% in Q3, and an improvement in 3.1pcts compared with 1H20. Profitability continues to pick up. With the further improvement of fine decoration penetration, we expect that the company will be able to maintain good profitability and profit quality by virtue of fine management and high-quality customers while achieving scale expansion.

Risk factors: residential sales growth is not as expected; fine decoration penetration is not as good as expected.

Investment suggestion: taking into account the influence of the regulation and control policies of the three red lines of real estate and the increase in the cost of catching up with work after the epidemic has been brought under control, we slightly reduce our net profit forecast for 2020-2022 to 2.2pm / 30max / 390m (the original forecast is 2.4pm / 3.440m), the corresponding EPS forecast is 1.46pm / 1.96pm / 2.56 yuan, and the current price is 38x/28x/22x / PE. We maintain the company's target price of 62.49 yuan (corresponding to 32x PE in 2021) and "buy" rating.