Event: on August 26, the company released its semi-annual report for 2021. In the first half of the year, the company realized operating income of 2.566 billion yuan, an increase of 28.87% over the same period last year, a net profit of 104 million yuan, an increase of 7.64% over the same period last year, and a net profit of 106 million yuan after deduction, an increase of 11.98% over the same period last year.

Subsidiary Cosmos New Energy continues to promote BIPV and wind power business, which has broad prospects for development and is expected to become a new momentum of the company's performance: on August 26, the company announced that its third-tier subsidiary signed an EPC contract with its first-class subsidiary. Xu Rui Wind Power, a third-tier subsidiary of the company, plans to invest in the construction of 50MW decentralized wind power project EPC general contract project, with a total contract amount of RMB 416 million, with the first-class holding subsidiary of the company, Zhongyi New Energy, as the contractor, this project lays the foundation for the company's follow-up related orders. In the future, building energy conservation is the main direction of the whole energy saving and emission reduction policy. Green buildings and green building materials are all new building applications driven by this goal. The close combination of photovoltaic and buildings in the future is an application to change the shape of buildings. It is also the trend of building development. Shenzhen Zhongyi New Energy Technology Co., Ltd., a subsidiary company established in 2017, focuses on the investment, construction and operation of new energy projects, and continues to promote photovoltaic building integration (BIPV) power generation business and wind power business, which may benefit from the development of the industry in the future.

"Decoration + property" coordinated progress, clear strategic objectives, in the future will continue to develop the property management industry resources, multi-strategy, bigger and stronger property management plate: in August 2020, the company acquired 100% equity of Jiazette, indirectly held 51.63% equity of Science and Technology Park property, realized the merger table, and the business scope was officially extended to the property sector. In the first half of 2021, property management business contributed 177 million yuan, accounting for 6.88% of operating income, an increase of 4.68pct compared with 2.2% at the end of 2020. The synergistic effect between decoration business and property management business is obvious; first of all, the decoration plate empowers the property company to undertake property management business, and the types of decoration engineering projects undertaken by the company for many years cover a wide range of types, including office buildings, commercial buildings, high-end hotels, ordinary residences, etc., with rich experience in decoration business, can provide overall design and engineering services for property companies to expand property projects, and has the advantages of process, information and so on. Secondly, the property management company can guide the decoration plate in the follow-up maintenance and secondary update of the management project, especially in the first-and second-tier cities, the property environment is inseparable from the professional service of decoration. in addition, the property company can provide a platform for value-added and extended services with customers in addition to the existing decoration services. the combination of the two is conducive to the promotion of business such as urban micro-renewal and the transformation of old residential areas. Property management is an important entrance for the company to enter the stock market, the company will continue to develop the resources of the property management industry, and is expected to achieve a major breakthrough in the future.

The transformation of urban old residential areas has been accelerated, and the head enterprises have benefited even more: according to the statistics released by the Ministry of Housing and Construction, there are still about 170000 old residential areas to be renovated across the country, containing a trillion-level market.

With the construction of new urbanization, the transformation of old residential areas and the in-depth promotion of "Belt and Road Initiative", various regions have accelerated the renovation of housing and the upgrading of consumption brought about by the improvement of national quality of life and standards. as well as the construction of infrastructure such as life, transportation and commercial facilities will provide new momentum for the architectural decoration industry.

The company focuses on exploring the assembly type, and is expected to achieve industrial upgrading in the future: at present, the construction industry is ushering in a new period of technological change, with systematic design, modular production and construction, with modern functions such as energy saving and consumption reduction, closed sound insulation, fire prevention and earthquake resistance, leading the industry to change from extensive to intensive, and gradually develop to the modernization of the construction industry. Prefabricated construction is the focus of the development of the modernization of the construction industry. It is also the mode of production of the construction industry in the future. Under the guidance of "science and technology promotion decoration", the company increases investment in scientific and technological innovation research and development, starts with new materials, new processes, new technologies and new equipment, and transforms R & D achievements into independent intellectual property rights to form and improve independent intellectual property rights system. By strengthening the construction of assembly R & D technical team, system and assembly production base, and strengthening the complementary advantages with enterprises and suppliers, a series of major breakthroughs have been made in the field of construction assembly. And promote the development of assembly decoration to modular design, standardized production, batch production and integrated installation with the thinking of architectural industrialization, and achieve substantial results in the field of architectural assembly decoration.

Investment suggestion: in view of the fact that the company relies on the main business of architectural decoration and cuts into the field of property management, the factors such as the acceleration of the transformation of old urban residential areas and the steady progress of urbanization in the industry are more beneficial to the leading enterprises in the industry. And the company uses blockchain technology to apply the supply chain to solve the pain point of poor cash flow in the industry, accelerate the upgrading of construction industrialization, focus on exploring assembly, and is expected to achieve industrial upgrading and further strengthen the company's comprehensive competitiveness in the future. The company's future profits are expected to maintain rapid growth, continue to give "buy"

According to the rating, the net profit from 2021 to 2023 is expected to be 331 million yuan, 431 million yuan and 536 million yuan respectively, and the EPS is 0.46,0.60,0.74 yuan respectively, corresponding to 11 times, 9 times and 7 times of PE.

Risk tips: the risk of macroeconomic fluctuations; the risk of policy regulation and control of the real estate industry; the risk of intensified market competition; the risk of the implementation of engineering projects; the risk of technological transformation and upgrading and the opening up of emerging markets; the risk of rising prices of raw materials; the risk of project quality and safety construction.