2020 the revenue is-22%, and the net profit is-68%. The decline is mainly due to the disturbance of the epidemic, the decrease in non-economic income and the sharp decrease in equipment income. The company's revenue target for 2021 is + 96% compared with the same period last year. The production and sales of components slowed down, and the unit price decreased slightly, but benefiting from cost reduction, efficiency and scale effect, unit gross profit continued to increase. The gross profit margin continued to rise, and the epidemic and the promotion of beautiful houses led to an increase in the rate of expenses and a decrease in operating cash inflows. New signings are higher than the same period last year, and orders on hand are abundant to boost strong repair. Continue to expand the scale + benefit moat. Taking into account the abundant on-hand orders, the continuous embodiment of scale + benefit advantages, and the new growth momentum of B2C products, we adjust the 2021-2022 net profit forecast to 660.50 million yuan (the original forecast is 580,000,000 yuan), and add 1.11 billion yuan to the 2023 forecast, corresponding to the EPS forecast 1.36Plus 1.74pm 2.27 yuan, and the current price corresponding to PE is 8.5x/6.7x/5.1x. Based on historical and comparable valuations, we gave the company 13 times PE in 2021 (2% discount to the company's historical average), corresponding to the target price of HK $21.13 and maintaining a "buy" rating.

2020 income-22%, return to the mother net profit-68%, located in the lower edge of the forecast center, epidemic disturbance, non-economic income reduction and equipment income significantly reduced as the main reasons for the decline, the company's 2021 revenue target + 96% compared with the same period last year.

In 2020, the company's operating income was 2.51 billion yuan (excluding stripped engineering business),-21.5% compared with the same period last year; gross profit was 910 million yuan,-17.2% year-on-year; and the net profit was 216 million yuan,-68% from the same period last year, which is located at the lower edge of the performance forecast center. The decline in performance is mainly due to the impact of the epidemic on the pace of downstream construction, an one-time reduction in non-economic income compared with the same period last year, and a significant reduction in equipment revenue. In terms of business, the revenue of PC component manufacturing / equipment is 2.42 billion yuan, compared with the same period last year, and the gross profit is 890 million yuan, compared with the same period last year. The growth of components slowed down due to the disturbance of the epidemic, and the hindrance of the construction progress of the joint plant led to a sharp decline in equipment revenue. The company's engineering business has been spun off, with equipment business accounting for only 3.5% of revenue. It is expected that the company will focus more on the main business of PC component manufacturing in the future. The company announced that the revenue budget target for 2021 is 4.92 billion yuan (+ 96% compared with the same period last year). With abundant orders on hand and the continued improvement of the industry, the company's performance is expected to be significantly repaired.

Under the disturbance of the epidemic, the production and marketing of components slowed down, and the unit price of sales decreased slightly, but the benefit, cost, efficiency and scale effect were reflected, and the gross profit per unit of components continued to increase. In terms of production and sales volume, the production and sales volume of 2020 components is 79.7 / 872000 cubic meters respectively, which is 7.0% compared with the same period last year. In terms of price, the average unit price of components in 2020 is 2774 yuan per square meter (- 51 yuan per square meter,-1.8 percent compared with the same period last year). The change in product structure led to a slight decrease in unit price. From the cost point of view, 2020 unit cost 1759 yuan per square meter (year-on-year-88 yuan per square meter, year-on-year-4.7%), cost reduction, efficiency and scale effect reflect the continuous downward cost; reflected in the gross profit, the unit gross profit in 2020 is 1015 yuan per square meter (year-on-year + 37 yuan per square meter, + 3.8%), and the profit level continues to rise under the disturbance of the epidemic, reflecting the size and management advantages of the company.

The gross profit margin continued to rise, and the epidemic and the promotion of beautiful houses led to an increase in the rate of expenses and a decrease in operating cash inflows. 2020 consolidated gross profit margin of 36.3%, year-on-year + 1.9pcts. Among them, the gross profit margin of manufacturing / equipment is 36.6%, 29.2%, + 2.0%, 4.8%, respectively, and the gross profit margin of the main component manufacturing industry continues to rise. The rate of expenses during the period is 30.2%, which is + 1.7pcts compared with the same period last year. Among them, the sales / management / R & D / financial expense rate is 9.6%, 10.7%, 5.0% and 4.9%, compared with the same period last year, and the expense rate has increased as a result of the disturbance of the epidemic and the promotion of Broad Mansion. In terms of cash flow, the net inflow of operating cash in 2020 was 180 million yuan (970 million yuan in the same period last year), mainly due to the decline in rebates and equipment sales affected by the epidemic; the net outflow of investment cash was 370 million yuan (1.31 billion yuan in the same period last year). It is mainly due to the basic improvement of the layout of the joint factory and the reduction of investment expenditure; the net outflow of financing cash is 80 million yuan (inflow 1.13 billion yuan in the same period last year).

The number of newly signed orders increased year-on-year, and on-hand orders boosted strong repair. The newly signed order for PC component manufacturing in 2020 is 4.09 billion yuan, compared with the same period last year. In 2016-2020, the newly signed CAGR reached 54%, leading the growth of the industry. We expect the company to maintain a rapid growth rate of 40% in 2021, compared with the same period last year. By the end of 2020, the company's PC had built 5.2 billion yuan (+ 38.6% year-on-year) unfinished orders, and component revenue was 2.1x (an increase of 0.5x over 2019). Abundant on-hand orders are expected to boost strong repair in 2021.

Continue to expand the scale + benefit moat, B2C brings new growth momentum. 1) continue to promote the national layout blueprint, the cumulative investment / production capacity / profitability of the joint plant in 2020 is 62-58-21, compared with the same period last year. The production capacity of the joint plant has reached 4.72 million cubic meters. 2) the company adds two new R & D bases in Zhengzhou and Wuhan to further promote technological innovation and application; continuously upgrade the PC-CPS management system platform to AI-CPS system to consolidate cost and benefit advantages. 3) in response to the national rural revitalization policy, build beautiful villages, and launch B-Box residential products on the basis of grand beautiful housing products; we expect beautiful houses or villages in more economically developed areas to take the lead in promotion, and with word-of-mouth established and convenience recognized, we are expected to usher in rapid growth in the future; we remain cautiously optimistic about B-Box products.

Risk factors: the progress of the company's A-share IPO is not as expected; the intensification of competition in the industry leads to a significant decline in the unit price of components; the landing and operation of the joint factory is not as expected; the operation effect of the PC-CPS system is not as expected; the promotion of C-end products is not as expected.

Investment suggestion: considering that the company has plenty of on-hand orders, the advantages of scale and efficiency continue to be reflected, and B2C products are expected to bring new growth momentum, we adjust the 2021-2022 net profit forecast to 660,000,000 yuan (the original forecast is 58gambit 7.5 million yuan), and add 1.11 billion yuan to the 2023 forecast, corresponding to the EPS forecast 1.36pm 1.74pm 2.27 yuan, and the current price corresponding to PE is 8.5x/6.7x/5.1x.

Based on historical and comparable valuations, we gave the company 13 times PE in 2021 (2% discount to the company's historical average), corresponding to the target price of HK $21.13 and maintaining a "buy" rating.