Incident: In 2018, the company achieved operating income of 599 million yuan, an increase of 13.73% over the same period of the previous year; realized total profit of 182 million yuan, a decrease of 19.64% over the same period of the previous year, and realized net profit attributable to shareholders of listed companies of 156 million yuan, a decrease of 18.95% over the same period of the previous year. Key investment points: Asset disposal income was drastically reduced, and the company's performance was in line with expectations: during the reporting period, the company's asset disposal income was 164,400 yuan, compared to 62.7788 million yuan in the same period last year. The added value of net operating profit was less than the reduction in asset disposal income, and net profit attributable to listed companies declined year-on-year. The new project was gradually put into operation, and revenue increased significantly: the company's revenue mainly came from bonded NdFeB magnets, hot-pressed NdFeB magnets, and samarium cobalt magnets. Sales revenue for all types of magnets increased compared to the same period last year. The company's samarium cobalt magnet project with an annual production capacity of 200 tons and a hot-pressed NdFeB magnet project with an annual production capacity of 300 tons were implemented and gradually put into operation in February 2018. Currently, it is the largest manufacturer of bonded NdFeB rare earth magnets in the world. Demand for downstream products has increased, and development space for bonded NdFeB has expanded: rare earth permanent magnets have the advantages of high efficiency and energy efficiency, and are widely used in energy saving and environmental protection and new energy industries. As the world pays attention to the development of a low-carbon and green economy, demand for bonded NdFeB applications in energy-efficient air conditioning motors, pump motors, power tools, energy-saving appliances, and intelligent robots will continue to grow. Profit forecast and investment suggestions: Considering the company's good operating conditions and the business scale is expanding year by year, we expect EPS to be 0.56, 0.66, and 0.71 yuan respectively in 19-21, and PE with a closing price of 13.41 yuan to be 23.87, 20.22, and 18.77 times, giving it an increase rating. Risk factors: rare earth prices fluctuated beyond expectations; the company's new projects could not be put into operation on time; changes in downstream industry demand.