Guide to this report: The expansion of production capacity is driving the acceleration of yarn revenue, and the network chain business is expected to rise steadily. Future production capacity investment will accelerate, and the recovery in cotton prices will lead to improved profitability, maintaining an increase in holding ratings. Key investment points: Maintaining an accumulation rating: A steady increase in production capacity drives yarn revenue growth. Since the network chain business fell short of expectations, the EPS in 2019-2021 was lowered to 0.54 (-0.12), 0.60 (-0.16), and 0.67 yuan. Reference comparable companies gave 15.4 times PE in 2019, and the target price was raised to 8.32 yuan. The full-year performance was steady, and Q1 improved month-on-month. In 2018, revenue was 14.307 billion, +13.58% year-on-year, and net profit was 752 million yuan, an increase of 10.98%. The performance was in line with expectations. Among them, yarn revenue was 7.222 billion (YOY +22.70%), and the growth rate increased by 9.8 pct. The rapid growth of yarn is mainly driven by the increase in production capacity. Net chain revenue increased 7.32% year on year to 7.017 billion, and the growth rate declined slightly due to fluctuations in cotton prices in the second half of the year. 2019Q1 had revenue of $3.634 billion (yoy +19.78%) and net profit of $172 million (yoy -21.47%), a month-on-month improvement. Xinjiang and Vietnam went hand in hand, and the production capacity layout was optimized and adjusted. At the end of 2018, the company's production capacity reached 1.89 million ingots, an increase of 90,000 spindles over the previous year, of which 150,000 ingots were added in Xinjiang. In order to optimize the production capacity layout, the company transferred the original production capacity of 60,000 ingots in Zhejiang to the western region with high economic efficiency. In the future, the company will accelerate production capacity investment. Vietnam's production capacity of 150,000 ingots is expected to be implemented in 2019, adding about 300,000 ingots throughout the year, and the total production capacity will reach 2.1 million ingots by the end of the year. While production capacity is growing, pattern optimization continues, focusing on Xinjiang and Vietnam, and leveraging synergies to reduce costs and increase efficiency. Cotton prices are picking up steadily, raising profit levels. Cotton prices declined in the second half of 2018 due to consumer pressure and trade wars. With clothing sales building up and rebounding, the trade war situation gradually became clear, and cotton prices stabilized in 2019, and it is expected that they will improve month-on-month in the future. Cotton prices are recovering, yarn sales are improving, and network chain business growth is accelerating. It is expected that the company's overall profit level will gradually rise in the future. Risk warning: There is a risk that cotton prices will fluctuate, and production capacity investment will fall short of expectations.