Incident: Ger Software released its three-quarter report. In Q1-Q3, 2020, it achieved revenue of 176 million yuan (+16% year over year) and net profit attributable to mothers/net profit of -0.34/ -0.43 million (-0.06/-0.23 million for the same period last year). Among them, 20Q3 achieved revenue of 0.64 million (+54%), and realized net profit attributable to mothers/net profit of 116/-3.56 million (-1320/-21.83 million for the same period last year). The performance exceeded expectations. Revenue growth accelerated in 20Q3, and gross margin improved significantly. In 20Q3, the company achieved revenue of 64.14 million, +54% year-on-year. Mainly due to the mitigation of the domestic epidemic, demand in the company's main business rebounded significantly. The gross margin of the 20Q3 company reached 65.29% in a single quarter, an increase of 6.35 pct over the previous year, and the profit level rebounded markedly. We judge that the company's traditional PKI main business has a clear market advantage, and the main business segment is expected to maintain a high level of gross margin and prosperity. There are plenty of on-hand orders, and revenue growth is expected to accelerate. As of the end of 20Q3, the company's contract debt was 190 million (80 million in the same period last year). Based on the company's inventory situation, we judge that the company has plenty of orders in hand. Since PKI technology is expected to be gradually promoted in the fields of domestic software and hardware, security cameras, blockchain, etc., we judge that the revenue volume of the company's emerging businesses will increase significantly in 2020-2021. We believe that in the short term, the company's revenue growth rate is more important than the profit growth rate. The future of Xintuo's business is expected to bring large software, operation and maintenance revenue to the company, and help the company break through the growth ceiling. Losses were significantly reduced in a single quarter, and sales and management expense ratios were effectively controlled. In 20Q3, the company achieved net profit of 1.16 million yuan (loss of 13.2 million in the same period last year), after deducting net profit from non-return to mother of 3.56 million (loss of 21.83 million in the same period last year). The loss reduction was quite obvious. The company continued to increase R&D investment. The R&D expenses for the Q3 quarter were 21.49 million (7.73 million in the same period last year), and the R&D expenditure rate for the single quarter increased from 18.6% to 33.5% year-on-year. The high revenue growth rate and the diluted sales expense ratio decreased by 3.2/33.6 pct year over year to 17.0%/25.4%, respectively. The net operating cash flow of the company in the 20Q3 quarter was 13.18 million (outflow of 2.07 million in the same period last year), and the quality of reports improved. Adjust profit forecasts to maintain a “buy” rating. Taking into account the impact of the pandemic and the increase in the share of new businesses, we adjusted the profit forecast. Net profit for 2020-22 is estimated to be 0.77/1.20/200 million yuan, respectively, and the corresponding EPS is 0.40/0.62/1.04 yuan, respectively. We will give the 2021 60x target P/E, corresponding to the target price of 37.20 yuan, maintaining the “buy” rating. Risk warning: repeated domestic epidemics, new business development progress falling short of expectations, etc.