Event: in the first half of 2021, there are 108 prefabricated building development goals and supporting policies across the country, 2 by the Ministry of Housing and 9 policies issued by Jiangxi and Zhejiang to promote the sustainable development of prefabricated buildings.

The comments are as follows:

According to the statistics of the prefabricated Construction Network, there are 108 development goals and supporting policies for prefabricated buildings across the country in the first half of 2021. According to the report of the Ministry of Housing and Construction on the Development of National prefabricated buildings in 2020, the total amount of prefabricated buildings newly started in 31 provinces, autonomous regions, municipalities directly under the Central Government and the Xinjiang production and Construction Corps in 2020 totaled 6.3 billion m2, an increase of 50% over 2019, accounting for about 20.5% of the newly built building area, achieving the work target of more than 15% by 2020 as set in the 13th five-year Plan of Action for prefabricated buildings. According to the opinions of 15 departments, including the Ministry of Housing and Urban-Rural Development, on strengthening green and low-carbon construction in county towns, the country needs to vigorously develop green buildings and building energy conservation, and new buildings in county towns should implement basic-level green building requirements, encourage the development of star green buildings, speed up the implementation of green buildings and building energy-saving and water-saving standards, strengthen design, construction and operation management, and constantly increase the proportion of green buildings in new buildings. Develop new construction methods such as prefabricated steel structure.

As the first batch of national assembly construction industry base, the company is committed to becoming the leader of the assembly industry and will actively build China Rallway's high-tech innovative assembly construction business platform. In the first quarter, the company put forward the development strategies of five business groups: assembly design group, assembly manufacturing group, assembly new material group, assembly construction group and assembly intelligent science and technology group. to form an assembled building industry chain integrating technical consulting, product research and development, architectural design, intelligent manufacturing, assembly construction, integrated decoration, information management and other aspects.

1) self-built "one institute and four rooms" (that is, prefabricated architectural design and research institute, prefabricated building laboratory, prefabricated building parts laboratory, prefabricated building intelligent manufacturing equipment laboratory, BIM and information research laboratory) and carry out in-depth cooperation with domestic well-known architectural design and research institutes to improve the company's design and development level in the field of prefabricated architecture. 2) adhere to the business pattern of "one center + N bases", constantly improve the company's regional operating capacity, outside the existing five major production bases in Beijing, Xinjiang and Jiangsu, choose the opportunity to build a new production base; 3) the company will optimize the current product structure, strengthen product research and development, and create an ecological chain of China Railway assembly parts by means of capital operation, joint venture and cooperation. 4) steadily promote the general contracting business of the project, focus on developing the "assembly +" business, and actively develop the assembly decoration business; 5) through incubation, mergers and acquisitions, joint ventures, equity participation and other means, to achieve a number of China Railway Assembly Department holding, equity participation in high-tech enterprises.

The company's newly signed contracts and existing orders are sufficient, and great breakthroughs have been made in the operating results in 2020. As of March 31, the company's newly signed contracts and orders in hand are about 445 million yuan, of which the contracts for prefabricated construction projects are about 437 million yuan and those for prefabricated construction parts are about 8 million yuan. Great breakthroughs have been made in the company's operating achievements in 2020: 1) the inherent market has been further stabilized and the regional operation has been expanded. The company gives full play to the synergistic effect with China Rallway, deeply studies and responds to national policies and regulations, and actively develops the prefabricated construction market in Beijing, Xiongan New area, Xinjiang, Shandong and other areas. has undertaken the construction of medical observation sites in Xinjiang, Shandong Juye State Construction Fenghua, Forrest Air conditioning Library and other projects. 2) the framework of mutually beneficial cooperation is basically constructed. First of all, the company continued to carry out business docking with various units in the China Rallway system, and completed the first, second and third phases of the Xiongan Builder's Home Project of China Railway Construction Group Co., Ltd. and signed prefabricated construction contracts or product sales contracts with relevant enterprises of China Railway first Bureau, China Railway second Bureau, China Railway Fifth Bureau and China Railway electrification Bureau. On September 24, 2020, the company formally signed a strategic cooperation framework agreement with China Railway Huatie Engineering Design Group Co., Ltd. On November 28, the company signed a strategic cooperation agreement with Laishui County, Baoding City. 3) the dominant areas have been continuously strengthened. The company continues to optimize the allocation of existing regional resources, give full play to the role and advantages of the five major production bases, vigorously open up the prefabricated construction market in Beijing, Suqian, Xinjiang Turpan, Xinjiang Wusu and other places, and have obtained orders for the construction of Rongchang District in Suqian, further consolidating the advantages in the existing business areas. Fourth, top-level design continues to promote the development of the industry. The company actively communicates with the model cities of prefabricated architecture to tap the potential of commercial cooperation. At the same time, combined with the actual situation of the existing five major production bases, the company actively carries out business docking, and conducts research on the prefabricated construction market in some economically developed areas or coastal cities in the future, actively preparing for further improving the layout of the production base.

Investment advice: maintain the overweight rating. It is estimated that the return net profit of the company in 2021 to 2023 will reach 1.0,1.6 and 200 million yuan respectively, and the corresponding price-to-earnings ratio will be 31,20 and 16 times. The prefabricated construction industry is currently supported by policies, and the industry is in a period of high growth. The company has strong technical and order-taking capabilities; after the controlling shareholder becomes China Rallway, it is expected to achieve business coordination and will actively build China Rallway's high-tech innovative assembly construction business platform.

Risk tips: policy support in the prefabricated construction industry is lower than expected; competition in the industry intensifies; downstream demand for prefabricated construction is lower than expected; raw material costs grow higher than expected; China Rallway brings lower-than-expected business support to the company; newly signed odd numbers are less than expected; loss or aggravation of impairment of assets such as bad debts.