The company's recent projects are progressing smoothly. According to the bidding situation disclosed by Wind Global Enterprise Library, China Railway Prefabricated Construction Technology Co., Ltd. (formerly known as Beijing Hengtong Innovation Overall Housing Assembly Co., Ltd.), a wholly-owned subsidiary of the company, is progressing smoothly this year, including the Daxing River People's General Contracting (EPC) project, the residential settlement construction project in Jingou Village, Yanghe New Area, and the Rongchang Community Project General Contracting (EPC). The controlling shareholder, China Railway's orders for the third quarter increased 24% year over year, and its strength is strong. The cumulative order value of China Railway in the first three quarters of this year was 1,354.200 billion yuan, an increase of 24.3% over the previous year. The amount of new orders for the third quarter was 483.860 billion yuan, up 24.6% year on year; including infrastructure construction of 379.740 billion yuan (+22.38% year on year), survey, design and consulting services of 7.890 billion yuan (+48.9% year on year), industrial equipment and parts manufacturing of 18.800 billion yuan (+69.7% year on year), real estate development of 27.110 billion yuan (+54.1% year on year), and other business of 50,320 billion yuan (+14.2% year on year). The company recently increased its capital by 700 million yuan to China Railway Assembly Technology, a wholly-owned subsidiary, which is conducive to further expanding its business scale. On November 25, the company held the 28th meeting of the third board of directors to vote by registered vote, and deliberated and passed the “Proposal on Capital Increase to Wholly-owned Subsidiaries”. It was agreed that the company will use its own capital to increase the capital of China Railway Prefabricated Construction Technology Co., Ltd., a wholly-owned subsidiary, by 700 million yuan. After the capital increase is completed, the registered capital of China Railway Prefabricated Construction Technology Co., Ltd. will increase from 300 million yuan to 1 billion yuan, and the company still holds 100% of its shares. On September 24, the company announced that the name of its wholly-owned subsidiary “Beijing Hengtong Innovation Complete Housing Assembly Co., Ltd.” was changed to “China Railway Prefabricated Construction Technology Co., Ltd.” and that the legal representative was changed from “Sun Zhiqiang” to “Single State”. The company reported revenue of 498 million yuan in 2020 and net profit of 16.07 million yuan; in 2019, revenue of 701 million yuan and net profit of 38.38 million yuan, accounting for a relatively large share of revenue among group companies. 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 0.77, 1.01, and 134 million yuan respectively, up 14%, 31%, and 33% 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.