Recently, we have seen the introduction of some policies that are beneficial to the prefabricated construction industry. Recently, Nanchang in Jiangxi, Taizhou in Jiangsu, Jingzhou in Hubei, Shenzhen, Shanghai and other places have issued notices one after another, demanding that the age management of employment in construction enterprises be standardized. it is forbidden to recruit and use men over 60 years old and women over 50 years old to engage in construction work (reference link). No, no, no. For example, the Urban and Rural Construction Bureau of Nanchang City issued a notice on further standardizing the age management of employment in construction enterprises, prohibiting the recruitment and use of them in any form to engage in "high-altitude, high-risk, high-risk, heavy physical work" at the construction site.

At the company level, we have seen the establishment of a joint venture between Tsukiyou Smart Technology and Dongzhu Ecological Environment (603359 SS) to carry out landscape engineering business. In addition, in the announcement on June 17, we also saw that the new business was promoting the rapid development of the company. We expect new business to account for more than 15% of total revenue in FY21.

We believe that the company's profits will enter a high growth phase, thanks to (1) the fast-growing prefabricated construction market (expected sales growth of more than 60%); (2) more cooperation in Henan with Jianye Group to expand its advantage in Henan; (3) significant contribution from new business. We find the company's current valuation attractive, and we value the company at 10.8 / 7.4 times earnings for fiscal 22, with a compound annual growth rate of 38% for three years.