Event: The company discloses its report for the third quarter of 2020. The comments on this are as follows: third-quarter revenue increased 38.7% year on year, gross margin declined year on year, and net profit attributable to cost investment declined year on year. The company's revenue for the first three quarters of 2020 increased 26.7% year on year to 670 million yuan, and net profit was down 17.5% year on year to 41 million yuan. 1) The Q3 revenue growth rate was relatively fast. The net profit of the Q3 parent declined due to declining gross margin and rising expense ratio. Revenue for the third quarter increased 38.7% year on year to 290 million yuan, and net profit was down 32.7% year on year to 017 million yuan. Q3 The company's revenue growth rate was fast. Gross margin fell to 23.0% from 31.2% in the same period last year, and overall gross profit increased 2.1% year on year to 66 million yuan. The company's Q3 expense ratio increased from 15.1% in the same period last year to 22.6%; among them, the large increase in value mainly included a 97.3% year-on-year increase in management expenses to 40 million yuan (mainly depreciation expenses and employee remuneration increases), and a year-on-year increase in financial expenses of 181.9% to 115 million yuan (mainly an increase in interest expenses of financial institutions). 2) The rapid growth of monetary capital, advance payments, and contract liabilities indicates that the scale of the company's business is expected to gradually expand. The company's monetary capital at the end of September increased 79% to 100 million yuan compared to the end of the previous year, mainly due to an increase in net cash from current business activities and financing activities; prepayments increased 281% from the end of the previous year to 28.26 million yuan, mainly an increase in material payments and project payments in advance; contract liabilities reached 68.07 million yuan, while advance payments received at the end of the previous year were 9.91 million yuan, mainly according to the new revenue standards. On July 14, the controlling shareholder of the company changed to China Railway; on August 20, the company's abbreviation was changed to China Railway Assembly, and a new general manager was appointed. On July 14, 2020, the subject shares transferred by the agreement on the change of control have completed the transfer procedure, and the controlling shareholder of the company was changed to China Railway. On August 1, 2020, the company announced that it intends to change the company's abbreviation to China Railway Assembly. On August 20, the company abbreviation change was completed. On the same day, the company appointed Mr. Sun Baoliang, the new general manager. From April 2014 to July 2020, Mr. Sun Baoliang served as Deputy General Manager and Financial Director of China Railway Real Estate Group Co., Ltd. On September 12, the company announced the signing of a financial services framework agreement with China Railway Finance Company. The total credit balance obtained was not more than 2.5 billion yuan, which is valid until the end of 2022. In order to optimize financial management, improve the efficiency of capital use, broaden financing channels, reduce financing costs, and diversify financing risks, the company plans to sign a “Financial Services Framework Agreement” with China Railway Finance Corporation. According to the financial services framework agreement, the financial company will provide a series of financial services to the company within the scope of operations, including but not limited to financial services such as deposit services, comprehensive credit, financial and financial advisory, and internal transfer and settlement services. Due to financial risk control and transaction rationality considerations, the following restrictions have been imposed on financial services transactions between the two parties: the maximum deposit balance (including accrued interest) held by the company in China Railway Finance Company shall not exceed RMB 1 billion; the comprehensive credit balance obtained by the company from China Railway Finance Company shall not exceed RMB 2.5 billion. The company received cash from loans in 2018, 2019, and the first half of 2020 was 550 million yuan, 70 million yuan, and 570 million yuan respectively, and the company's balance ratio at the end of June 2020 was 47%. The company received credit from China Railway Finance Corporation, which is expected to strengthen the company's financing capacity. On September 19, the company announced a transaction amount of 91 million yuan related to China Railway. The two sides are cooperating more and more closely. It is estimated that from September 2020 to December 2020, there will be an increase in daily related transactions with China Railway and its subsidiary holding subsidiaries for a total amount of no more than 91 million yuan; of these, 200 million yuan for the sale of goods and services for China Railway, and 700 million yuan for related transactions with China Railway Finance. The total amount of daily related transactions between the company and its holding subsidiaries and China Railway and its holding subsidiaries in the 12 months prior to August 31, 2020 was $86.382 million. Investment advice: Maintain an increase in holdings rating. The company's net profit from 2020 to 2022 is expected to reach 0.82, 1.08, and 143 million yuan respectively, up 22%, 32%, and 32% year-on-year, corresponding to price-earnings ratios of 43, 33, and 25 times. The prefabricated construction industry is currently supported by policies, and the industry is in a period of high growth. The company's production base in Suqian, Jiangsu was successfully put into operation in the first half of 2019, improving production capacity layout. The company's technology and ability to receive orders are strong; after the controlling shareholder becomes China Railway, it is expected that business collaboration will be achieved. Risk warning: Policy support for the prefabricated construction industry falls short of expectations; industry competition intensifies; downstream demand for prefabricated construction falls short of expectations; raw material cost growth is higher than expected; business support brought to the company by China Railway falls short of expectations; impairment losses or intensification of assets such as bad debts.