Core view The company is a leader in the building materials and mining roller presses and supporting equipment industry. The domestic increase mainly depends on the increase in the penetration rate of roller presses in the cement raw materials and mine grinding markets. The company's roller press aftermarket service profitability is strong and there is plenty of room for growth. The company mainly sells roller presses, as the core equipment for grinding systems in the cement and mining industries. They are one of the most efficient and energy-saving crushing equipment currently known. They are in line with the development direction of industrial policy, and are products encouraged by the state for development. The upgrading of energy consumption indicators in the building materials industry, driving the renewal of equipment and total capacity control and reduction and replacement to promote the use of new production capacity to replace old production capacity is the main source of demand for the company's roller presses at present. The increase in the penetration rate of the company's products in the cement raw materials and mining stone grinding markets is the company's future focus. The competitive pattern of the downstream building materials industry, especially the cement industry, has improved markedly in recent years, concentration has increased markedly, and the industry's prosperity and profitability are relatively good. The building materials equipment industry has entered a period of relative maturity. It is a typical stock market. It is mainly dominated by renewal demand. Additional domestic demand is limited, mainly due to the expansion of foreign markets, but the domestic post-market space for building materials equipment is huge, and profitability is good. The gross margin of the company's roller press parts and maintenance services has maintained a high level, demonstrating the company's competitive position in the grinding equipment market. The company focuses on the layout and development of aerospace components and tooling design and manufacturing business. The scale and category will continue to expand, driving rapid business growth over the next five years. The company's aviation parts and tooling design and manufacturing business mainly includes the design and manufacture of structural parts, assembly parts, tooling and processing equipment in four categories of products and services. The company now has five major specialized factories, one is a parts manufacturer, mainly mechanical metal structural parts; the second is a sheet metal factory. The company has a core unique advantage in the sheet metal field. Half of the factory workers are in sheet metal; third, assembly plants, mainly assembly parts; fourth, tooling manufacturers, which provide tooling and large-scale molds; and fifth, supporting equipment, including intelligent supporting equipment such as cutting aluminum materials. In 2019, in order to further promote the development of aerospace business, the company established the Aerospace Industry Development Center to coordinate industry deployment and business development plans. Dekun Airlines has invested in new wholly-owned subsidiaries in Wenjiang District of Chengdu and Xindu District of Chengdu, Chengdu Dekun Liguo Intelligent Technology Co., Ltd. and Chengdu Dekun Aerospace Technology Co., Ltd., respectively. The company has built new bases in Chengdu Xindu and Wenjiang through two new subsidiaries in Chengdu and Wenjiang, expanding its scale to meet strong demand, while also continuing to invest in R&D to expand product categories. For the first time, it was covered by an “increase in holdings” rating. We expect that in 2020-2022, the company will achieve operating income of 7.66 (up 11% year on year), 8.67 million yuan, and 1,011 million yuan, with a compound increase of 14% over the next two years based on 2019; net profit attributable to the parent company is 1.99 (up 16% year on year), 2.35 million and 293 million yuan, with a compound increase of 21% over the next two years based on 2019. The total share capital is 1,018 million shares, corresponding to EPS of 0.20, 0.23, and 0.29 yuan. The main valuation points are as follows: on June 24, 2020, the stock price was 4.80 yuan, the total share capital was 1,018 billion shares, corresponding to a market value of 4.9 billion yuan, and the 2020-2022 PE was about 25, 21, and 17 times. The company's roller press and related equipment business has a clear competitive advantage, benefiting from capacity replacement and equipment transformation and upgrading in the building materials and mining industry. After equipment service, the market has strong profitability and plenty of room for growth. The aerospace parts and tooling design and manufacturing business is the main driving force for future growth. For the first time, we have been given an “increase in holdings” rating. Risk warning: New product development and mass production fell short of expectations, and the prosperity of the building materials and mining equipment industry exceeded expectations.