The 2018 performance forecast was slightly higher than the expected company performance forecast: 2018 revenue of 800 million yuan, up 2.6% year on year, and net profit attributable to the parent company of 160 million yuan, up 2.3% year on year. Corresponding 4Q18 revenue was 210 million yuan, up 1.2% year on year, and net profit attributable to the parent company was 38 million yuan, up 42% year on year. The company's 2018 net profit was slightly higher than our previous expectations. Key points of interest 2H18's performance improved dramatically: 1) Under the double pressure of raw materials and exchange rate fluctuations in 2017 and 1H18, the company's net profit growth faced challenges. The net profit margin also fell to 20.7% (2017) and 17.2% (1H18) from 25.5% in 2016. 2) 2H18 Raw material prices began to fall, while the RMB depreciated sharply, with a cumulative depreciation of 6% from July to December, creating opportunities for the company to recover its profitability. Under the influence of a low year-on-year base, the company's 2H18 net profit rose sharply by 57%, while the net interest rate recovered to 24%. The market competitiveness of the company's drain pumps is strong: 1) 1H18 has a lot of new product development and brand investment, which reduces the company's net profit, but it has a positive effect on strengthening innovation and maintaining product competitiveness. The sales volume of the innovative series of drain pumps developed by the company increased in 2018, consolidating the company's leading position in the drain pump market. 2) However, the Chinese washing machine market has formed an oligopoly, the concentration of downstream customers is high, and the future profitability of the company's drain pump business is facing a ceiling. The company's unique dishwasher washing circulation pump has entered the Whirlpool and Fangtai supply chain. As an emerging household appliance category, the current growth rate of dishwashers is far higher than other kitchen appliance categories. AVC retail monitoring shows that sales volume of dishwashers in 2018 was +24% compared to the same period. The future development of the washing circulation pump business depends on whether the company can expand new customers in the dishwasher market in a timely manner. Export business risk mitigation: 1) In 2017, the company's drain pumps exported to the US accounted for ~ 30% of revenue. Whirlpool is one of the company's important customers. 2) The company plans to set up a subsidiary in Thailand to avoid tariff risks. 3) Currently, trade negotiations between China and the US are progressing steadily, and the risk of trade friction has been mitigated somewhat. Valuation and advice The company's performance forecast was higher than expected. The 2018/19 EPS forecast was raised 6%/6% to 0.27 yuan/0.28 yuan, and the 2020 EPS forecast was introduced at 0.31 yuan. Maintaining a neutral rating, the target price is 5.65 yuan, corresponding to 21/20x 2018/19e P/E. The company's current stock price corresponds to 21/20x2018/19e P/E, and the target price is 1% away from the current stock price increase. Risk The risk of fluctuations in the RMB exchange rate, the risk of new business development.