The company's revenue in the first three quarters of the announcement was 3.059 billion, up 12.39% from the same period last year, and its net profit was 368 million, up 82.86% from the same period last year. The revenue in the third quarter alone was 1.295 billion, up 27.09% from the same period last year, and its net profit was 201 million, up 104% from the same period last year. Kangli is a flexible variety that we have always recommended. At present, the elevator industry has shown a trend of differentiation, the share of head enterprises is becoming more and more concentrated, the profit repair brought about by "economies of scale + pattern improvement" will continue, and the company's excellent cost management and control capabilities will also be highlighted this year. 2020 is a bumper harvest year for Kangli. It is estimated that the net profit of Kangli in 20-21 is 455 million / 562 million, corresponding to PE of 21 / 17 times. Continue to strongly recommend!

The main reasons why the growth rate of net profit far exceeds the growth rate of income include: (1) Gross profit margin increased significantly, gross profit margin in the first three quarters was 32.59%, which was higher than that of last year, mainly because the company investigated the supply and demand of raw materials market and locked in the purchase price of some raw materials in a timely manner, which was conducive to the stable increase of gross profit margin. (2) the declining effect of steel prices will also be transmitted to the purchased parts. Under the premise of ensuring the supply quality and timely delivery, the purchasing department of the company group has fully communicated with the suppliers, and the price of the purchased parts has been adjusted to a certain extent. The reduction in the cost of purchased parts has also contributed to the increase of the company's gross profit margin. (3) the company continues to invest in R & D, and with the investment of the intelligent production line, the upgrading of the intelligent manufacturing plant and the commissioning of the test center, the production process is optimized, the production tooling capacity is improved, and the product design is improved. it reduces the product unit cost and improves the competitiveness of the company's products. (4) scale effect + fine management, all staff make concerted efforts to strictly control various costs and expenses. In the first three quarters, the sales expense rate was 10.32%, a year-on-year decline of 1.4pct, and the management expense rate was 7.84%, which was basically the same as last year.

The operating indicators are improving, and the operating quality is steadily improving: (1) the net cash flow of operating in the first three quarters is 400 million, returning to the best level since 2015; (2) benefiting from the substantial increase in gross profit margin, the company's net profit rate in the first three quarters is 11.91%, which is significantly higher than that in 19 years, and the net profit rate in the third quarter is 15.52%, which is the best level in history. The net profit rate in the third quarter is 15.52%. (3) contract liabilities / accounts received 1.242 billion, an increase of 22% over the same period last year, which confirms that orders are full; (4) the ending inventory is 1.13 billion, which is higher than the same period last year, and the structure is healthy.

New and executed orders continue to grow. By the end of the third quarter, the company's valid orders being executed were 6.46 billion yuan, with an increase of 10.5% over the end of the same period last year. It is estimated that new orders received in the first three quarters increased by 14% compared with the same period last year, and by 19% in the third quarter alone. The company seized the peak of the national key construction and actively participated in the market bidding. From January to July, the company won a total of 600 million yuan in the high-speed rail and rail transit market, accounting for 118% of the total in 2019. The market competitiveness and market recognition of the company's heavy-duty escalator products are strengthening day by day. With the expansion of the company's business scale, the company is still actively planning the long-term development of maintenance and renovation, maintenance and maintenance business. Vigorously open up the market for paid services.

Kangli is a flexible variety that we have always recommended. 20 years is a bumper harvest year for the company, and we continue to strongly recommend it. The profit repair brought about by "economies of scale + pattern improvement" will continue. At present, the elevator industry has shown a trend of differentiation, and the share of the head enterprise is becoming more and more concentrated. Thanks to the company's excellent cost management ability (raw materials + expense side) and significant scale effect, the gross profit margin is expected to increase significantly for the whole year. Controllable production costs + accelerated infrastructure investment + accelerated clearing of the industry + real estate stabilization is expected to continue the boom. In addition, the transformation of old residential areas is an important direction to expand domestic demand, and the elevator industry is one of the main beneficiary industries. Opening the growth ceiling is expected to open a new round of industry business cycle, and Kangli is also one of the beneficiaries. 20 years is a bumper harvest year for Kangli, which is strongly recommended.

Risk hint: steel price fluctuation risk, real estate growth rate is not as expected.