Revenue recovered steadily. Net profit for the first three quarters continued to decline year on year. The company released its 2020 three-quarter report. The first three quarters of 20 years achieved revenue of 1,424 billion yuan, -2.3% year-on-year; realized net profit of 161 million yuan, -10.2% year-on-year, and net profit of 157 million yuan, or -10.6% year-on-year. Among them, Q3 achieved revenue/net profit of 552/65 billion yuan in a single quarter, +5.93%/-0.35% over the same period last year. Due to intense competition in the industry, the company's Q3 revenue grew slowly year over year, and profit margins were under pressure due to increased expense ratios, Q3 net profit declined year over year in a single quarter. We lowered the company's 20-22 EPS forecast to 0.73/0.97/1.21 yuan (previous value: 0.92/1.18/1.48 yuan), and the target price was 16.00 yuan to maintain the “buy” rating. Q3 revenue was flat month-on-month, and gross margin was stable. The company achieved revenue of 552 million yuan, +5.93% year-on-month, which was basically the same in Q3. The Q3 revenue growth rate declined by 9.17% month-on-month compared to Q2. We expect price reduction measures to recover in Q3, mainly due to the company's Q2 price reduction measures to speed up shipments and seize market share, but sales volume is under pressure due to intense industry competition. The company's gross profit margin for the first three quarters was 25.8%. Among them, the gross profit margin for the Q3 quarter was 26.4%, +0.2 pct year on year, a slight increase of 0.6 pct over the previous month. Q3 The price of the raw material PVC rebounded, but the company's gross margin remained stable and rising month-on-month. We expect the company's revenue to grow steadily in the southwest region, accelerate off-site expansion, and the company will continue to promote the construction of subsidiary projects in Hainan and Yunnan. The Hainan base is expected to be put into operation by the end of the year, and the market share of the southwest region is expected to increase further. The increase in the cost ratio brought about a decrease in net interest rate. The asset quality was still superior. The company's expense ratio during the Q3 period was 11.6%, +1.5pct year-on-year. Among them, the sales, management, R&D, and financial expense rates were +0.5/+0.2/+0.7/+0.1 pct year-on-year respectively. The increase in sales expense ratio and R&D expense ratio led to an increase in the company's overall cost rate. Q3 The net profit margin for a single quarter was 11.9%, down 0.8 pct from the previous year. The company achieved a net operating cash flow inflow of 89 million yuan in Q3 in a single quarter, which was basically the same as the previous year. The company's revenue ratio for the first three quarters was 109%. Among them, the Q3 quarterly revenue ratio was 111%, up 3pct from the previous year, and the revenue ratio remained high above 100%. As of the end of the third quarter, the company's balance ratio was 18.9%, and the interest-bearing debt balance was only 45 million yuan. There is still plenty of room for leveraged expansion in the future. Lowering profit forecasts and maintaining the “buy” rating Xiongsu Technology is one of the largest comprehensive suppliers of plastic pipelines with a production capacity of 200,000 tons or more in China for a few years. It is based in South China and faces the whole country. However, we believe that the company is actively expanding its market, has excellent financial statements, and there is still plenty of room for future leverage, and with the company's production capacity in Hainan and Yunnan, the market share is expected to increase steadily. However, considering the slow growth in Q3 revenue and the intense competition in the industry or the pressure on gross margin, we lowered the company's revenue and gross margin forecast, and lowered the net profit forecast for 20-22 to 223/2.94/369 million yuan (previous value: 2.81/3.60/450 million yuan). Currently, comparable companies have an average of 16.5 xPE in response to Wind's unanimous expectations in '21. We approve that the company was given 16.5 xPE in '21, with a target price of 16.00 yuan (previous value: 18.40 yuan), maintaining a “buy” rating. Risk warning: Raw material prices have risen sharply, new production capacity cannot be digested in time, and industry competition has intensified.