The company released its three quarterly reports for 2020, and we believe that the improvement of the supply pattern in the northeast region is expected to bring performance flexibility in 2021.

Main points of investment:

Maintain the "overweight" rating. In the first three quarters, the operating income was 13.09 billion, an increase of 14.18%, and the net profit was 154 million, an increase of 85.08%, which was in line with market expectations. Considering the impact of the epidemic in 2020, we lowered the EPS in 2021 to 0.06,0.12 (- 0.06,0.02), increased the 2022 EPS forecast by 0.20 yuan, and maintained the target price of 5.54 yuan.

The degree of coordination of the northeast cement market has improved, and prices have risen sharply since November. We have observed that with the establishment of the Pan-Northeast cement Industry structure Adjustment Group jointly established by major leading cement enterprises in October, the degree of cooperation of cement in Northeast China is expected to be significantly enhanced, driven by the orderly stacking terminal demand in the market, and the northeast cement rose sharply to 420 yuan / ton in early November. And considering that the northeast has fully entered the staggered peak and stopped production from December 1 to March 21, the high price of cement is expected to last until the peak season of 21, which is expected to bring obvious performance flexibility.

The layout of the whole pharmaceutical industry chain has been deepened, and new growth points have been built in many directions. The company's pharmaceutical sector has opened the layout of the "research-production-marketing" industry chain, and gradually deepened the investment to enhance the comprehensive strength. The successful entry of "Shenyi capsule" into health insurance is expected to accelerate the expansion of sales channels and achieve revenue growth.

The acquisition of Beijing Yongan Fuxing by Jilin Pharmacy, including the brand of "Yongan Tang", a century-old brand, and the laying of online Tmall and JD.com flagship stores, will accelerate the business growth of the company's retail pharmacies and improve the new business model of "physical stores + online sales + free medicine delivery + wholesale".

Holding brokerage + shareholding bank, with high flexibility. The company holds 30.81% of Northeast Securities, which is the controlling shareholder, while Jilin Bank holds 9.96%. The financial sector has a high upward flexibility, and the company fosters new profit growth points by expanding the development scale of the financial industry.

Risk hint: the risk of sharp decline in real estate investment and rising cost of raw materials