The company recently announced its report for the third quarter of 2020. The first three quarters achieved operating income of 3.736 billion yuan, up 5.00% year on year; net profit of the parent company was 208 million yuan, up 1.20% year on year. The review is as follows: There are many successful projects in Q3, and technological transformation is expected to help future business growth. From July 11 to October 12, 2020, the company announced that it won consecutive bids for major projects worth 2,052 billion yuan, and won the total amount of mechanical and electrical installation professional subcontracting and intelligent professional subcontracting projects for the first stage of the Nanhai Sports Center project 245 million yuan, and the decoration project of Italy's Starrio shopping park project is 173 million yuan. In the first half of 2020, due to the impact of the epidemic, Q1 business declined significantly. Q2 began to gradually recover, and new and ongoing orders had returned to normal levels. At the same time, the company's technological transformation was gradually implemented. It plans to invest 1.5 billion yuan to build the Shunde Wusha Big Data Center to form the company's second main business, which is conducive to improving the company's technology service capabilities and comprehensive competitiveness. Technology transformation and development is expected to drive the company's business expansion and growth in the future. Q3 revenue increased sharply in a single quarter, and gross margin declined slightly. Q3 achieved revenue of 1,745 billion yuan in a single quarter, an increase of 33.91% over the previous year, driving the first three quarters to achieve revenue of 3.736 billion yuan, an increase of 5.00% over the previous year. The reason for the rapid growth in Q3 is due to the fact that the company increased its business expansion efforts after the pandemic, the number of new orders signed in Q2, and the improvement in business conditions. The company's gross margin was 17.32%, down 0.08 percentage points from the same period last year. Excluding the impact of the increase in business reform, the gross margin of the same caliber is basically the same. The announcement revealed that major projects won consecutive bids during the Q3 period. The amount of orders in hand was abundant, and it is expected that future revenue will increase further. The expense ratio for the period increased slightly, and net profit recovered positively. The expense ratio for the first three quarters was 8.60%, an increase of 0.66 percentage points over the previous year. Among them, the management expense ratio was 2.95%, up 0.73 percentage points from the previous year, mainly due to the increase in expenses for new subsidiaries; the financial expense ratio was 1.73%, down 0.09 percentage points from the previous year. The company announced in September that the remaining capital raised in the initial public offering would be used to permanently supplement working capital, which would help reduce financial expenses in the future; and the R&D expense rate was 3.17%, up 0.19 percentage points from the previous year. The reduction in the effective corporate tax rate is mainly due to the company's use of high-tech preferential tax rates in the current period. Q3 achieved net profit of 111 million yuan in the single quarter, an increase of 24.42% over the previous year, driving the company's net profit of 208 million yuan in the first three quarters, an increase of 1.20% over the previous year, and driving the growth rate to rectify. The net outflow of operating cash flow increased, and the balance ratio decreased to 0.9129, an increase of 8.34 percentage points over the previous year. Cash received mainly due to the sale of goods and the provision of labor services increased year-on-year; the payout ratio was 1.0330, an increase of 14.17 percentage points over the previous year, mainly due to the purchase of goods and the receipt of labor payments. Taken together, net operating cash flow for the first three quarters was -206 million yuan, an increase of 267 million yuan over the same period last year. The company's balance ratio was 48.36%, down 4.03 percentage points from the beginning of the year, mainly due to the impact of private capital raised, which increased the company's total assets and net assets. In October 2020, the company plans to publicly issue convertible bonds, with a total amount of no more than 1,160 billion yuan. They are mainly used for construction project construction, the Wusha Big Data Center, and supplementary liquidity, which is conducive to relieving the company's financial pressure and promoting the continuous growth of its main business. As of the September announcement, some of the company's directors, supervisors and senior management have voluntarily increased their holdings by 1,885 million shares, showing firm confidence in the company's future development prospects. Investment advice: The company disclosed a series of major projects that won bids. Q3 revenue in the single quarter increased significantly year-on-year, driving a return to positive growth in the first three quarters. The company's technology sector is also advancing rapidly. We maintained net profit of $303 million, $373 million, and $480 million in 2020-2022, but considering changes in the company's additional share capital, EPS was adjusted accordingly to 0.42, 0.52, and 0.67 yuan/share, corresponding to PE of 18, 14, and 11 times, maintaining the “buy” rating. Risk warning: business diversification increases management costs; fixed asset growth rate declines; technological transformation and development falls short of expectations