The company recently terminated the acquisition of Huade Storage's shares: On January 10, 2019, Yinfei Storage announced the termination of the purchase of 100% of Huade Storage's shares. The consideration for the terminated transaction was $456 million (50% stock +50% cash). Huade's revenue is about 50% to 90%, Yinfei's net profit is about 30%, the production capacity is about 60,000 tons, and the overseas sales ratio is about 50%. Among them, the US, Europe, Japan, etc. are the main places where the products are sold, and the company's quality is excellent. We believe that the termination of the acquisition is mainly due to: 1) Since October 2018, trade frictions between China and the US have intensified, compounded by slump in market sentiment. Yinfei's stock price has declined from 10 yuan/share to 6 to 7 yuan/share, and fixed growth costs have increased; 2) In July 2018, the US Department of Commerce launched a “double reverse” investigation into steel frames imported from China, and US sales revenue accounted for a high proportion of Huade, which may put pressure on performance. Controlling shareholders and their co-actors reduced their holdings by 6%: On March 3, Yinfei Storage announced that controlling shareholder Shenghe Investment (holding 46.0%) and co-actor Shanghai Beiyu (holding 9.3%) will reduce their holdings of total share capital by 6% over the next six months, of which centralized bidding will be reduced by 2% and commodity transactions by 4%. Shenghe Investment and Shanghai Beiyi lifted sales restrictions on January 22, 2019 and December 11, 2018, respectively. The actual controller of both was Jin Yueyue, Chairman of Yinfei. Remind them to pay attention to the short-term pressure of reducing holdings on the company's stock price. Comment on the commencement of the Ma'anshan production line project as scheduled: On September 6, 2018, Yinfei Storage and Ma'anshan Yushan Economic and Management Committee signed the “Intelligent Storage Equipment Production Line Project Investment Contract”. The total investment of the project is 1 billion yuan. The new shelf production capacity will reach 150,000 tons after completion of the project. Considering that the current shelf production capacity of Yinfei's main products is about 70,000 to 80,000 tons, after completion of the project, it will break through the production capacity bottleneck. On February 22, 2019, the Ma'anshan project commenced as scheduled. It is expected that part of the project will be put into operation as early as the second half of 2020. If production capacity is fully released, it will contribute 1 to 2 billion dollars in revenue. The company's gross margin/net profit margin from 2012 to 2017 was 34%/13%, respectively. This production line expansion will contribute 3.4 to 680 million gross profit and 130 million to 260 million net profit. Since there is some pressure on the sales side, we assume that production capacity will be gradually released over seven years. The export sales of Yinfei Storage are mainly in Southeast Asia, South America, the Middle East, etc., and are only affected by trade frictions: unlike Huade Warehousing, the original purchaser, which has developed countries as its main export target, has developed countries as its main export target, Yinfei Storage accounts for only about 1/4 of its exports, and is mainly from developing countries such as Southeast Asia. The valuation suggests that due to the increase in order settlement in the fourth quarter, we raised our 2018 profit by 6% to 94 million, lowered our 2019 profit by 2% to 100 million yuan, and introduced a 2020 profit of 118 million yuan to maintain a neutral rating. The current stock price corresponds to 24.8x/23.2x 2018/19 price-earnings ratio. Due to the macroeconomic downturn and the short-term negative impact of holdings reduction on stock prices, we lowered our target price by 24% to 8 yuan, corresponding to 24.1x the 2019 price-earnings ratio and 4% upside. Risks: Trade friction between China and the US has intensified, the production capacity of the Ma'anshan project is difficult to digest, and the majority shareholders have reduced their holdings.