The Company's 1H2020 operating results missed expectation. During1H2020, sales and net profit went down YoY by 4.0% and 60.2% to RMB105.6bn and RMB860 mn, respectively. A lower gross margin, a decrease innon-operating profit and a rise in impairment loss on financial assets are themain causes behind the earnings decline in 1H2020. With productionresumption in April 2020, quarterly sales in 2Q2020 surged 9.6% YoY toRMB69.75 bn; however, quarterly net earnings in 2Q2020 fell YoY by 19.7%to RMB1.16 bn. The quarterly results were lower than our expectation.
　　Newly signed orders in the first half of 2020 reached RMB305.5 bn, upYoY by 10.6%. It is important to note that quarterly new orders signed by theCompany in 2Q2020 surged 19.1% YoY (+39.2% QoQ) to RMB177.8 bn. Inwhich, quarterly domestic new orders in 2Q2020 jumped 38.6% YoY(+147.2% QoQ) to RMB148.2 bn, while overseas new orders fell 30.2% YoY(-56.3% QoQ) to RMB29.6 bn during the quarter.
　　Nationwide power sector investment in 7M2020 reached RMB419.2 bn,up YoY by 28.3%. We expect total investment in domestic power sector in2020 may reach an all-time high and hit the RMB1 trillion milestone, withRMB400 bn spent on power engineering and RMB600 bn on power grid.
　　We maintain the "Accumulate" investment rating and TP of HK$1.00. OurEPS estimates from 2020-2022 are RMB0.146/ RMB0.184/ RMB0.205,respectively. The TP translates to 6.0x/ 4.8x/ 4.3x 2020-2022 PER or 0.5x/0.4x/ 0.4x 2020-2022 PBR.