The 2018 results were in line with expectations. The company's 2018 performance: operating income was 794 million yuan, up 2.0% year on year; net profit was 163 million yuan, up 1.3% year on year, and profit per share was 0.27 yuan. Operating income corresponding to 4Q18 was 200 million yuan, down 1% year on year; net profit was 36 million yuan, up 36% year on year. The year-end dividend was 0.1 yuan/share. Combined with the mid-term dividend, the 2018 dividend rate was 191%. The company predicts that 1Q19 will achieve net profit of 0.30 to 034 million yuan, an increase of 25% to 40% over the previous year. Cost reduction and exchange rate depreciation led to the restoration of profitability: 1) The company's annual domestic sales revenue was +17% year over year, and export revenue was -5% year over year. By business, drain pump sales continued to rise, and revenue increased 5% year on year, consolidating the company's leading position in the drain pump market. 2) Benefiting from the decline in raw material prices in 2H18 and the sharp devaluation of the RMB (cumulative depreciation of 6% from July to December), the company's 4Q18 gross margin increased by 3.1ppt to 41.1% year on year. At the same time, exchange earnings increased sharply by 89%, and the 4Q18 net profit margin increased 4.9ppt year on year. Strengthen research and development of new products: 1) In 2018, the company continued to step up research and development of new industrial projects (wall-mounted spa toilets, AC charging pile products, and micro-charging smart socket products), and the R&D investment in revenue increased by 2ppt. 2) The newly established holding subsidiary, Shenzhen Faraday Electric Drive Co., Ltd., has a direct shareholding ratio of 51%. It is mainly used for R&D, manufacturing and sales of automotive motor controllers, which will help boost the company's competitiveness in the NEV business. The development trend is expected to benefit from the easing of trade friction between China and the US, and the promotion of new products remains to be seen: 1) Substantial progress has been made in the seventh round of high-level economic and trade negotiations between China and the US. The US will postpone the plan to raise tariffs on Chinese goods exported to the US on March 1. In addition, the company plans to set up a subsidiary in Thailand, tariff risks have been mitigated. 2) The company continues to promote new products such as dishwasher washing circulation pumps, spa toilets, and industrial robots. The core components of new energy vehicles have begun to be produced and sold in small batches, and are still in the cultivation period. The specific performance is yet to be observed. The profit forecast raised the EPS forecast for 2019/20 by 17%/18% to 0.33/0.37 yuan, taking into account the mitigation of the risk of trade friction between China and the US and the fact that the RMB exchange rate is still depreciating compared to last year. Valuation and recommendations maintain a neutral rating. Due to an increase in profit forecasts, the target price was raised by 18% to 6.65 yuan, corresponding to 20x/18x 2019/20e P/E, and there is room for 9% increase in stock prices compared to the current stock price. The company's current stock price corresponds to 19x/17x 2019/20e P/E. Risks The risk of fluctuations in the RMB exchange rate, the risk of trade friction between China and the US, and the risk of developing new business.