Technology empowers adorn dark horses, and strategic transformation enhances profitability. The company was first founded in 1994. It is a leading decoration company with 26 years of development history. It was listed and traded on the Shenzhen Stock Exchange in 2016. Relying on the main decoration business, the company integrates architectural decoration, design and development, landscaping, housing construction and municipal administration, and façades. It is committed to growing into a comprehensive service operator for urban and rural construction. Through technological empowerment, the company is committed to improving the level of decoration, building the first share in technological decoration, increasing investment in prefabricated and BIM, using blockchain technology to solve problems in the decoration industry, and intervene in the field of IDC and cloud computing. The company is actively expanding the industrial chain around its main business, while strategically transforming property management, IDC, and cloud computing. The company's business has shown a good trend of diversified operations, steady growth, and gradual acceleration. Profitability is steadily improving, and future development is worth looking forward to. The growth of the decoration industry has clearly slowed, and the concentration has increased, and the strong are becoming stronger. The prosperity of the decoration industry is mainly affected by infrastructure investment, real estate development investment, etc. At present, China's infrastructure investment and real estate development investment have entered a new normal — a stage of high base and low growth, which in turn affects the prosperity of the decoration industry. The decoration industry is mainly divided into official decoration, hardcover, and home decoration. The entry threshold is low and competition is sufficient. After the construction of government buildings was stopped in 2013, competition in the industry intensified markedly, compounded the decline in industry prosperity, and small and medium-sized decoration companies were forced to withdraw. From 2011-2018, about 20,000 decoration companies withdrew, 3.3 million workers switched jobs, and industry concentration gradually increased. In 2015-2017, the revenue of 17 listed decoration companies, including Gold Mantis, accounted for 2.09%, 2.14%, and 2.29% of the total output value of the industry, respectively. In 2018, the market share of the top five decoration companies in the industry reached 1.70%, and the characteristics of the strong company Hengqiang are obvious. At the same time, listed decoration companies actively carry out strategic transformation through mergers and acquisitions, cultivate new performance growth points, and enhance the company's ability to operate sustainably. The qualifications are complete and the competitiveness is strong, and sufficient order growth can be expected. The company has various qualifications in engineering fields such as decoration, garden, municipal administration, curtain wall, etc., and can expand into engineering fields such as garden, municipal administration, housing construction, and curtain walls while deepening the main decoration business. At the same time, the company has established a nationwide business network, deeply explores the South China regional market, and vigorously explores regional markets such as East China, Central China, and North China. The company has achieved remarkable results in market development, and new orders have recovered steadily in the 2nd quarter of 2020. As of the end of June 2020, the company had active orders of 8.718 billion yuan, 1.79 times the order revenue ratio, helping to release the company's performance. At the same time, the company has sufficient monetary capital, low debt ratio, and large room for financial leverage. As of the end of September 2020, the company's monetary capital was 1,058 billion yuan, accounting for 16% of the total assets for the same period. According to the announcement, the company has initiated a convertible bond financing plan, and the funding raised will further enhance the company's financial strength; the company's balance ratio is 48.36%, down 4.02 percentage points from 2019, providing space for the company's leveraged management, and the company's future growth is good. Strategic transformation of property management, IDC, and emerging industries are worth looking forward to. In May 2017, the company participated in SEG Property's mixed transformation and obtained 25% of the shares. In 2019, SEG Property achieved operating income of 343.51 million yuan and net profit of 31.85 million yuan; in September 2020, the company completed the acquisition of 100% of Jiazette's shares and held the Science Park property, adding new recruits to the property management sector. At the same time, the company is actively transforming into business fields such as IDC and cloud computing. In May 2020, the company acquired 60% of Kuanyuan Electronics shares through a cash acquisition, and the company took a solid step towards transformation into the IDC and cloud computing fields. At present, Kuanyuan Electronics has signed a memorandum of strategic cooperation with Meiyun Zhishu and Foshan Mobile to develop technical and commercial cooperation in IDC, industrial Internet and other fields. According to the announcement, in order to better promote the development of emerging industries such as IDC and cloud computing, the company obtained an intentional credit line of 600 million yuan from Industrial Bank and cooperated with the company in IDC, cloud computing and blockchain; accelerated the construction of the Wusha (Kuanyuan) big data center through convertible bond financing. The total investment of the Wusha (Kuanyuan) big data center was about 1.5 billion yuan, and the total number of cabinets after completion was about 10,000. The company's emerging industries are worth looking forward to. Investment advice: The company's revenue in 2020-2022 is expected to be 60.74 yuan, 7.410 billion yuan and 88.93 yuan, respectively, up 25.0%, 22.0%, and 20.0% year-on-year; net profit is 307 million yuan, 408 million yuan and 503 million yuan, respectively, up 24.0%, 33.0% and 23.1% year-on-year, respectively; earnings per share are 0.43 yuan, 0.57 yuan and 0.70 yuan respectively. The company's dynamic PE was 17.3 times, 13.0 times, and 10.6 times, respectively, and PB was 1.7 times, 1.5 times, and 1.3 times, respectively. The company focuses on the main decoration industry, actively expands and extends the engineering industry chain, and transforms emerging fields such as property management, IDC, and cloud computing through epitaxial expansion strategies. Through endogenous growth and epitaxial expansion, the company's performance rebounded rapidly and became a dark horse in the decoration industry's performance. We are optimistic about the development of the company's main business, the extension of the industrial chain, and the layout of emerging industries. The future growth is good. Maintaining the company's “buy-A” rating, the target price is 9.6 yuan. Risk warning: Risk of large macroeconomic fluctuations, risk of declining growth rate of domestic fixed investment, risk of execution of projects under construction falling short of expectations, risk of project repayment risk, risk of property management and IDC data center business promotion and forecasting performance falling short of expectations, etc.