Incident During the reporting period when the company released its 2017 annual report, the company maintained a relatively stable business pattern. In 2017, the company achieved operating income of 2,656 billion yuan, a year-on-year increase of 6.22%, and realized net profit attributable to listed companies of 36 million yuan, a year-on-year decrease of 69.74%. A brief review of revenue and profit fell short of expectations. According to the annual report, the company achieved net profit attributable to listed companies of 36 million yuan during the reporting period, a year-on-year decrease of 69.74%. The main reason for this is that in '17, the company increased investment in new energy fields such as fuel cell industry chains, IDC projects, energy storage projects, and lithium-ion power batteries, and new projects were temporarily unable to generate benefits during the reporting period. At the same time, the procurement price of raw material lead ingots rose rapidly, and product prices remained stable, leading to a marked decline in short-term gross margin; in terms of financial expenses, the company was greatly affected by changes in the RMB exchange rate, and exchange losses increased dramatically, which had a certain impact on performance; in '17, the company transferred part of its Shenzhen production base business to production bases in Hubei and Vietnam, and part of production capacity was wasted during the transfer process, leading to an increase in production costs. In the short term, the company urgently needs measures to reduce production costs to ensure a return to profitability. Cash flow pressure surged due to extended repayment cycles and business relocation. In terms of cash flow, the company's net operating cash flow fell 332.73% year-on-year during the reporting period, mainly due to undiscounted bill receivables from major customers at the end of the period; the company increased investment in lithium batteries, IDC, etc., and increased year-end prepayments and inventory; and the relocation of some lead-acid battery businesses at the Shenzhen base wasted production capacity, and gross margin declined. By the end of '17, the company's current debt was about 1.2 billion. Although the company had raised funds to ease the pressure on book cash flow, if the project cannot be repaid on time or the new project cannot be completed according to plan, the cash flow situation will become a major problem in the company's operation. To increase investment in scientific research, based on the long-term development report period, the company continued its previous investment in R&D and stepped up the development of hydrogen proton exchange membrane fuel cells to meet the growing demand for the new energy vehicle market. At the same time, the company's research on vehicle start-stop battery recycling also achieved good results. Currently, the company has developed a green, economical and viable recycling process based on the 3R principle, and is undergoing final test line installation and commissioning. EPS for 2018-19 is expected to be 0.50 and 0.70 yuan, respectively, and the corresponding PE will be 25 and 18 times, respectively. The first rating will give an “increase” rating, and the target share price is 15.00 yuan. Risk warning: 1) Lead ingot prices are rising; 2) New product development progress falls short of expectations.