Key investment events: The company released its 2018 annual report. The company achieved annual revenue of 24.1 billion yuan, up 11.2% year on year, gross margin level of 24.1%, down 5.2 percentage points year on year. Net profit attributable to the parent company was 124 million yuan, down 43.9% year on year, and net profit per share was 0.30 yuan, down 61.3% year on year. In the fourth quarter, the company achieved operating income of 881 million yuan, up 25.6% year on year, and net profit attributable to shareholders of listed companies was 57.3 million yuan, down 44.9% year on year... The 2018 profit distribution plan was to distribute a discovery dividend of 2.50 yuan (tax included) for every 10 shares, no bonus shares, and no capital increase from capital reserve funds. In the first quarter of 2019, the company's sales revenue increased 2.7% year on year to 461 million yuan, gross margin 0.8 percentage points year on year to 30.8% year on year, and net profit attributable to shareholders of listed companies was 13.07 million yuan, down 74.8% year on year. Overall demand in the consumer electronics market fell short of expectations and affected the company's revenue growth rate: the company's sales revenue for the full year of 2018 increased 11.2% year-on-year to 2.41 billion yuan, and the revenue growth rate slowed. Judging from product segmentation, the company's core product consumption orders and the slow growth rate of precision components for tablets were the main reasons. Although the expansion and growth rate of markets including e-cigarettes, medical devices, and touch displays is ideal, it is still unable to make up for the shortage of consumer terminal orders. Judging from the distribution of the market, the growth rate of shipments in the domestic market is lower than that of overseas markets. The decline in gross margin was constrained by the capacity utilization rate, and the cost rate remained stable and manageable: in 2018, the company's gross margin fell 5.2 percentage points to 24.1% year on year. Among them, insufficient capacity utilization rate for precision structural parts of consumer electronics and tablet computers caused a significant decline in the gross margin distribution of related products, which in turn became the core reason affecting overall gross margin. Large-scale order releases for medical devices, e-cigarettes and other businesses did not gradually begin until the second half of 2018. So what we can see is that gross margin appeared in the fourth quarter of 2018 There was a marked recovery from month to month. In terms of cost ratio, the company's investment in new products and channel construction is still ongoing. The overall scale has increased, while the revenue growth rate is lower than expected, the cost rate has risen slightly, but the overall cost rate is still manageable. In the future, as orders and products gradually mature, the company's investment growth rate is expected to slow down. In 2019, business expansion gradually entered the harvest period, and new products were released: the company's overall strategic plan is still to provide customers with a full range of precision metal structural parts manufacturing services and become a leading manufacturing service provider in the precision metal manufacturing service industry. The main work direction in 2019 includes: 1) The market continues to expand the application areas of products. In addition to consumer electronics as the main force, continue to increase the number of products provided to existing customers and increase the market share of various series of products, and strive to expand the company's sales scale; 2) Improve high precision in terms of technology The technical level of metal structural parts manufacturing; 3) In production, consumption is reduced and efficiency is reduced through automated transformation. We believe that traditional products in the consumer electronics market are still declining in the short term, but the company's customer and channel layout in e-cigarettes, medical devices, and touch displays is expected to enter the harvest period in 2019. Effective growth in order size will make up for the shortcomings of consumer electronics and bring new contributions to the company's performance. Investment advice: We forecast the company's earnings per share for 2019 to 2021 of $0.58, 0.83, and $1.01, respectively. The return on net assets was 11.8%, 15.2%, and 16.3%, respectively, maintaining the buy-B investment recommendation. We believe that the company's accumulation and industry reputation in metal manufacturing processes have good prospects for the future, whether it is a core smart terminal manufacturer or a new entrant in the e-cigarette and touch display industry. Risk warning: Shipments of terminal products from major core customers fall short of expectations; shipments of new products such as e-cigarettes fall short of expectations; capacity expanders are not climbing as fast as expected, affecting the company's profitability.