The testing demand for high and low voltage electrical appliances has a certain degree of rigidity, and the high voltage electrical appliance testing market has a lot of room for growth. The demand for high and low voltage electrical appliances for electrical testing is rigid. Currently, the testing of low-voltage electrical appliances in China is mainly compulsory; a voluntary product certification management system is adopted for high-voltage electrical appliances. There is still room for improvement in China's per capita electricity consumption. It is expected that the electricity consumption of the whole society will continue to grow, and the sustainable expansion of electricity demand will support the power industry's new investment and equipment replacement needs. At the same time, future power grid investment will gradually shift to grid intelligence and distribution grid construction, which is expected to bring demand for additional equipment. Looking at the long term, the low-voltage electrical appliance testing market is relatively stable, and the high-voltage electrical appliance testing market has a lot of room for growth. The company has strong technical strength. The company ranks first in the country/world in multiple indicators for electrical appliance testing. The company is the only independent third-party testing agency in China that can simultaneously carry out high and low voltage electrical appliance testing services. The testing qualifications are complete, and the testing capabilities are in a leading position in the industry. The company has established five technical indicators No. 1 in the world and 5 No. 1 in China, and many technical indicators have filled gaps in the country; in 2015-2017, the company ranked first in the industry in terms of total assets, operating income, and market share of high-voltage electrical and low-voltage electrical appliance testing. As a leading enterprise in the domestic high and low voltage electrical appliance testing industry, the company has adopted an investment and development strategy of “hierarchical promotion and gradual commissioning”, and has gradually developed a full-coverage inspection capability from low voltage to high voltage. High investment in additional testing bases has made leading electrical appliance testing companies in the country continue to increase their testing bases. By the end of 2018, the company's total fixed assets and projects under construction (including construction materials) had reached 2,922 billion yuan. With the rapid growth of the company's fixed assets, the share of depreciation in operating costs gradually increased, from 38.6% in 2011 to 66.1% in 2018. According to the construction plans and actual progress of the various projects under construction of the company, the company expects that most of the current project construction will be completed within 2020, and the company's depreciation expenses are expected to reach the highest value in 2021. After 2021, the company's depreciation expenses will show a trend of decreasing year by year as the depreciation period for some fixed assets ends. We believe that as the company strengthens internal assessment management, gradually develops business in non-East China regions, and the overall utilization rate gradually rises, starting in 2019, the scissor gap between the company's revenue growth rate and depreciation growth rate will be reduced or even corrected. The company will enter a stage where profit growth is faster than revenue growth, and performance is expected to usher in high growth. For the first time, the “Highly Recommended” rating company was given a “highly recommended” rating as a leading testing leader for high and low voltage electrical appliances, and increased investment in laboratories. As the projects under construction gradually improve and the company's production capacity utilization rate increases, it is expected that it will usher in a period of performance release. We expect the company's net profit in 2019-2021 to be 1.81/2.40/329 million yuan, respectively, and the corresponding EPS is 0.24/0.32/0.43 yuan, respectively. The current stock prices are 26/19/14 times corresponding to the year 2019-2021, respectively. For the first time, coverage gave a “Highly Recommended” rating. Risk warning: Electrical appliance testing business expansion falls short of expectations, downstream industry prosperity falls short of expectations, and construction in progress falls short of expectations