Key investment points: Outreach mergers and acquisitions of power distribution leaders, improve the industrial chain, and build a comprehensive power system operator. The company successfully acquired 100% of Jiangsu Pengchuang's shares and entered businesses such as power design, power engineering turnkey, operation and maintenance services, and built a comprehensive power system operator by opening up the upstream industrial chain. At the same time, in line with China's power system reform and the direction of distribution grid investment and construction gradually opening up to social capital, the company participated in the China Energy Power Investment Industrial Fund and entered the field of park distribution grid construction, operation and maintenance. Considering the company's ability to win bids for the power distribution business and Jiangsu Pengchuang's engineering grade B design qualification, the “distribution network equipment manufacturing+EPC engineering” model is expected to provide new impetus for the steady growth of the company's traditional main business. New energy vehicles and energy storage markets have good prospects. Hunan Yacheng was acquired to lay out lithium battery materials. In addition to successfully acquiring Jiangsu Pengchuang, the company also successfully acquired 100% of Hunan Yacheng's shares. Its main business is lithium battery cathode material precursors. Currently, its products include cobalt tetroxide, cobalt hydroxide, and iron phosphate. Downstream customers are mainly leading companies in the industry such as Samsung SDI and Peking University Pioneer. The company plans to expand the 20,000 ton battery-grade iron phosphate project based on expectations for the future NEV and energy storage market and in response to the shortage of orders. After delivery, the project will greatly increase the production capacity and market share of Yacheng iron phosphate products in Hunan, thus achieving the future development plan for Yacheng, Hunan to expand its market share. The second phase of the Tianjin Maolian copper-cobalt slag reactor project is progressing smoothly. As of May 2018, the second phase of the Tianjin Maolian copper-cobalt slag reactor project has successfully completed the land acquisition exploration phase in Zambia and has entered the construction phase. The company expects the construction period to be about 12 months. The first phase of the project is expected to be completed and put into operation in May 2019; the second phase of the project is expected to be completed and put into operation 3-6 months after the first phase of construction is completed. Both phases of the project are 500,000 ton slag projects. After delivery, they are all expected to produce 6,000 tons of cobalt metal and 10,000 tons of copper metal per year. The capital increase in Tianjin Maolian ensures the smooth development of the project. Prior to the acquisition of Tianjin Maolian, Maolian had problems with a high debt ratio and lack of working capital to carry out the project. The company and the M&A fund Ningbo Yuanzong successfully increased the capital of Tianjin Maolian to guarantee working capital for daily operations and reduce the debt ratio by repaying bank loans. Profit forecast and investment rating: The company entered the power EPC project to enhance the profitability of its main business, while acquiring Hunan Yacheng to enter the lithium battery cathode precursor field. Furthermore, the company leverages Zambia's copper-cobalt slag resources through mergers and acquisitions, which is expected to become a new cobalt resource star. Currently, the copper and cobalt project in Zambia is progressing smoothly and is expected to be officially put into operation in 2019. Considering the risk of a sharp increase in the Congolese gold resource tax, the value of Zambia's cobalt resources has increased significantly. The company's EPS for 2018-2020 is estimated to be 0.76 yuan, 1.00 yuan, and 1.59 yuan, respectively, and the PE corresponding to the current stock price will be 25.26 times, 19.28 times, and 12.11 times, respectively. Maintain an “Accumulation Rating.” Risk warning: (1) the risk that the copper and cobalt mine in Zambia will fall short of expectations; (2) the risk of falling copper and cobalt prices; (3) the risk that demand for lithium battery precursors is unanticipated; (4) the risk that the construction progress and profit of the 20,000 ton battery-grade iron phosphate expansion project in Yacheng, Hunan will fall short of expectations; (5) the risk that the effects of the company's epitaxial mergers and acquisitions fall short of expectations.