This report is read as follows:

The company's performance in the first quarter of 2019 is in line with expectations. With the release of the company's production capacity, the company's performance has risen steadily. The company is a leading enterprise of bead steel wire in China, and the increase in output will lead to the release of the company's performance.

Main points of investment:

Maintain the "overweight" rating. The company achieved operating income of 606 million yuan in the first quarter of 2019, up 17.43% from the same period last year, and its net profit was 43 million yuan, up 11.43% from the same period last year. Maintain the company's forecast of $0.87, $1.00, EPS of $1.09 in 2021, maintain the company's target price of $14.83, and maintain the "overweight" rating.

ROE improved year-on-year, and the main business developed steadily. The company's net sales interest rate in the first quarter of 2019 was 6.54%, up 0.84% from Q4 in 2018; 2019Q1's ROE was 2.81%, up 0.5% from the previous quarter and 0.08% from the same period last year, and the company's profitability rebounded after a decline in the fourth quarter of 2018. The company's main business has developed steadily, and the production and sales of leading products have increased steadily. We expect that with the gradual landing of the company's production capacity, the output will further increase.

Monetary funds have risen sharply, and financial costs have continued to decline. Benefiting from the company's good operating conditions, the company's monetary funds in the first quarter of 2019 increased by 52 million yuan, or 10.76%, compared with the end of 2018. In the first quarter of 2019, the company's asset-liability ratio was 54.16%, up 1.81 percentage points from the end of 2018. The main reason for the increase in the company's debt ratio was the expansion of receivables, and the company's interest-bearing liabilities were stable as a whole. In the first quarter of 2019, the company's financial expenses were 3.38 million yuan, a decrease of 2.95 million yuan compared with 2018Q1. It is expected that the company's financial expenses will continue to decline further.

The industry pattern is good, and the company's competitive advantage has improved steadily. The company is the leader of China's bead steel wire industry and participates in the formulation of industry standards. The domestic market share of bead steel products is maintained at about 30%. It is the largest bead steel wire manufacturer in China and has a solid position in the industry. The pattern of bead wire industry is stable, the company as the industry leader, with the gradual improvement of its own production capacity, the company's competitive advantage will be steadily improved.

Risk hint: tire production goes down sharply