Incident: The logic of “wind power rush installation” runs through the wind power industry trend in '19, and the company's performance as a leading wind power composite material reversal is highly certain. On March 12, 2019, the company released its 2018 annual report. During the reporting period, due to factors such as consolidated loss orders from major customers and rising raw material prices, the company achieved total operating income of 536.178 million yuan, down 9.84% from the same period last year; net profit attributable to shareholders of listed companies was 87.89 million yuan, down 20.5% from the same period last year. With the gradual release of the company's fund-raising and production capacity and wind power generation entering a boom in installed capacity, the reversal of the company's performance is highly certain. Profit for the first quarter of '19 is expected to be 33,000-38 million yuan, a significant increase of 96.05%-125.75% over the previous year. Opinion: Order losses combined with bad debt charges led to a year-on-year decline in profit in 2018. The company is a leading manufacturer of wind power supporting equipment in China. Major downstream customers include internationally renowned wind power companies Siemens Gamesa, Vestas, Goldwind Technology, and Zhejiang Yunda. Siemens and Gamesa are the second and fourth largest wind power companies in the world, respectively. In 2016, the company's operating income to Siemens accounted for 16.48% of the company's total revenue. In 2018, Siemens Gamesa carried out a business merger in the first and second quarters, causing the company to lose some orders. Furthermore, in 2018, the prices of the company's main raw materials, such as glass fiber, resin, gel coat, and steel, were high, and the company's overall gross margin declined significantly. The annual gross margin was 36.97%, down 6.75 percentage points from the previous year, lower than the average gross margin of 7.42 percentage points for the past five years. There is strong certainty about future gross margin increases. The company accrued bad debts of 4.373,500 yuan in 2018, which affected the company's annual net profit to a certain extent. The company has always focused on R&D, production, sales and service of composite materials. Its main business includes wind power ancillary products (engine room covers, etc.), non-metallic molds, construction vehicle covers, etc., accounting for 58.5%, 30.3% and 8.61% respectively. In 2016, production capacity was 3,300 units, 18,000 square meters and 5,000 units, respectively, and is constantly increasing. In 2018, the company's product sales volume was 2203 units, 26,326 square meters and 6044 sets, respectively. In recent years, more and more offshore wind power generation equipment has been added. Most of them are high-power fans, and the corresponding cabin covers are also larger, so sales have declined; however, the corresponding prices are also higher. Sales of construction vehicle cover products are increasing year by year, including not only general engineering and agricultural vehicle cover products, but also public transportation vehicle covers and rail transit vehicle parts. The added value of the products is higher. The capital raised by the company after going public in '17 will be used to support the construction of 1,000 sets of wind turbine housings and 25 sets of blade molds, and an annual output of 100,000 pieces of composite materials for vehicles. Production is expected to be completed by July 2020. The consumption problem improved, and the rapid installation of fans in 19-20 benefited the company. In 2018, 20.59 million kilowatts of grid-connected wind power were added, with a total of 184 million kilowatts connected to the grid, accounting for 9.7% of total installed power generation. Wind power accounts for 5.2% of total power generation, an increase of 0.4 pct over 2017. The average number of hours used for wind power was 2,095 hours, an increase of 147 hours over the previous year; the average wind abandonment rate was 7%, down 5 pct from the previous year, and the wind waste power limit was clearly reduced. Among the six provinces included in the “red warning” in 2017 due to high wind abandonment rates, Inner Mongolia, Heilongjiang, and Ningxia have already lifted the ban; only Jilin, Gansu, and Xinjiang are still under the red warning. On December 28, 2016, the National Development and Reform Commission issued the “Notice on Adjusting Benchmark Feed-in Targets for Onshore Wind Power for Photovoltaic Power Generation” to reduce the benchmark feed-in tariffs for onshore wind power newly approved for construction after January 1, 2018, and electricity prices before implementation of the price reduction for projects approved before 2018. Therefore, projects approved in 2017 will begin before the end of 2019, ushering in a rush to install wind power, leading to an increase in wind power construction projects in 19-20. Offshore wind power has become the next arena, and the trend of large-scale expansion has not changed. China has a coastline of 18,000 kilometers and contains very rich wind resources, and the wind speed at sea is higher than on land. The average number of hours used by offshore fans can reach 3,000 hours, and regions with good onshore wind resources only use about 2,000 hours. Offshore wind power has a strong resource advantage. Offshore wind power can currently enjoy a high subsidized electricity price of 0.85 yuan/kWh. At the current average electricity cost of 0.62 yuan/kWh, it enjoys a very high return on investment. In a situation where onshore wind power prices are falling and wind farm resources are tight, offshore wind power has become a new growth point and development direction for the industry. The National Energy Administration issued a plan. It is planned that the installed capacity of offshore wind power will reach 5 GW by the end of 2020, and 10 GW is under construction. The coastal provinces have also released their own offshore wind power development plans, and the overall plan scale far exceeds 5GW. We believe that the total installed capacity of offshore wind power is expected to exceed 8GW in 2020 and maintain a high growth trend. Wind farm resources are limited, and new fans put into operation in the future will pay more attention to improving resource utilization efficiency, so large-scale expansion is an inevitable trend, which is a major benefit for the company's production of fan supporting parts. Orders from major customers are in hand, and performance growth in 19-20 is highly certain. The company's wind power supporting parts shipments account for about 13% of the world, and exports to major customers such as Vestas and Siemens Gamesa account for more than 60% of the company's revenue. Normally, the supply cycle is about half a year. At the end of 2018, the company began receiving new orders from Vestas, the world's largest wind power company. Its share increased from 70% to 90%, and the share of Siemens Gamesa also reached 60%. Currently, the number of orders is sufficient. In addition, the 100,000 automotive composite material projects in the company's fund-raising projects will improve the industrial chain of structural parts, functional parts, etc. on the basis of existing vehicle covers, and become a new increase in the company's performance. The company's performance base was low in '18, and the company's performance will increase dramatically in 19-20. The company's performance forecast for the first quarter of '19 showed a profit of 33 million yuan to 38 million yuan, a year-on-year increase of 96.05%-125.75%. Conclusion: In 19-20, China's wind power industry will experience a peak in installed capacity, and the foreign wind power industry will develop steadily. As the second largest wind power supporting manufacturer in the world and the largest in China, the company will fully benefit from the steady development and large-scale trend of wind power. Currently, the company has sufficient orders, and the gradual release of additional production capacity for fund-raising projects in 19-20 will bring increased performance to the company. We expect the company's operating income from 2019 to 2021 to be 732 million yuan, 977 million yuan and 1,230 million yuan respectively. Net profit attributable to shareholders of listed companies is 139 million yuan, 191 million yuan and 242 million yuan respectively, and earnings per share are 1.25 yuan, 1.72 yuan and 2.18 yuan respectively, corresponding to PE 19 times, 14 times and 11 times, respectively. We are optimistic about the company's future development. We covered it for the first time and gave it a “Highly Recommended” rating. Risk warning: The commissioning of new projects falls short of expectations; demand for downstream products falls short of expectations.