Event: The company achieved sales revenue of 5.616 billion yuan, a year-on-year increase of 11.47%, and net profit attributable to shareholders of listed companies of 385 million yuan, a year-on-year decrease of 4.12%. Among them, revenue from LED light sources and lighting products was 5.119 billion yuan, up 13.68% year on year, sales volume was 431 million units (sets), up 15.24% year on year; revenue from energy-saving lighting sources and lighting products was 422 million yuan, down 13.94% year on year, and sales volume was 79 million units (sets), up 8.22% year on year. Profitability was stable, and gross margin bottomed out and rebounded. The lighting industry was relatively sluggish in 2018. The company still achieved revenue growth, and profit declined slightly, mainly due to an increase on the cost side. In order to cope with fluctuations in the global economic situation and industry pattern, the company paid higher expenses on the sales side and management side to deal with and lay out a more sustainable business model, leading to an increase in the overall cost rate. Among them, the sales expense ratio was 5.34%, +0.75pct; the management expense rate+R&D expense ratio was 10.47%, the year-on-year ratio was +1.4pct; and the financial expense ratio was -0.65%, down 1.82 pct year on year. In terms of gross margin, the annual gross profit margin was 24.28%, which is basically the same as the previous year, but Q4 gross margin reached 30.19%, returning to a high level in recent years, mainly due to the company's good cost control. Production capacity and product layout are complete, and marketing channels are gradually improved. The company has established four major bases in Shangyu, Zhejiang, Xiamen, Fujian, Yujiang, Jiangxi, and Jinzhai, Anhui. In 2018, it reached an annual production capacity of 420 million LED light sources and 100 million sets of LED lamps. In terms of bulb products and lamp products, some of the company's individual products have already taken shape. In terms of sales channels, the company has set up subsidiaries in many countries around the world, developing engineering business while developing local retail business, making the business model more balanced. Actively promote transformation and welcome new changes in the lighting industry. The company has been undergoing four major transformations in recent years: technology route transformation (energy-saving lamps → LED, currently LED accounts for more than 90%), product transformation (light source → lighting), management transformation (business group → control group), and business model transformation (OEM → independent brand). LED lighting is the general trend, and shifting from quantitative growth to qualitative growth is also an inevitable choice for the company's business development. With the obvious trend of intelligence and IoT in the lighting industry, company transformation is conducive to better product innovation and market model innovation, and adaptation to industry changes. At present, the company has begun mass production of intelligent lighting products. For the first time, it has completed orders for 100,000 sets of light sources and tens of thousands of sets of smart lamps from a single customer, which is progressing smoothly. Profit forecasting and valuation. We expect the company's revenue from 2019 to 2021 to be 62.66/72.88/8.504 billion yuan, and net profit from the mother to be 431/5.17/611 million yuan. For the first time coverage, a “buy” rating is given. Risk warning. Downstream demand for LEDs is weakening; industry competition is intensifying.