The company is a leading domestic lead-acid battery enterprise, transforming and upgrading into the field of lithium-ion battery and fuel cell. The company's lead-acid battery business has made steady progress, and the business value of lithium-ion battery has been realized, both of which build the company's performance safety margin. The company has a leading degree of commercialization of fuel cell business, high-quality and perfect industrial chain layout, and is optimistic about the long-term growth of its fuel cell business. We predict that the EPS of the company from 2019 to 2021 is 0.49 Universe 0.56 PE 0.69 yuan, corresponding to the times of PE in 42-37-30. Coverage for the first time, giving a "overweight" rating.

The company is the leader of domestic lead acid, and the layout value of lithium-ion battery is realized. The company is the leading domestic lead-acid battery enterprise, the current product range covers lead-acid battery, lithium-ion battery and fuel cell. Among them, lead-acid batteries and lithium-ion batteries are mainly exported overseas. In 2018, the company's lead-acid battery exports accounted for 32% of the country, and customers included high-quality leaders in communications, UPS, new energy and other fields. In 2018, the company's lead-acid business achieved steady growth by expanding overseas markets, and the lithium business started a value-cashing cycle, with revenue of 479 million yuan (year-on-year + 181.7%), accounting for 16.2% of total revenue (year-on-year + 9.7pcts). The company has full orders and large profit margins in 2019, and is expected to become a medium-and short-term growth pole.

Enter the hundreds of billions of fuel cell market and extend the core link of endogenous card position. The company cut into the fuel cell in 2016 and integrated the two-line layout through independent research and development and industrial chain. So far, it has accurately covered the upstream core material membrane electrode, mid-stream stack manufacturing, system integration and supporting facilities end hydrogenation station, which is one of the most perfect targets of the industrial chain layout in the industry. In our country, the system integration of the whole vehicle and the middle reaches in the downstream has been localized. Nowadays, stack manufacturing and membrane electrode preparation are the core clamping links. The stack and membrane electrode are of high value and critical. The perfect and high-quality layout of the company is expected to take the lead to achieve a domestic breakthrough and take the initiative in the market.

The progress of commercialization is leading and the strategic development direction of fuel cell is determined. The company's fuel cell engine is in the leading level in China in volume specific power and mass specific power. The company's fuel cell products are in a leading degree of commercialization. In 2018, a total of four models equipped with the company's products entered the recommended catalogue of new energy vehicles of the Ministry of Industry and Information Technology, with customers such as Jinlong bus, Dongfeng Automobile and ZTO Express bus. In September 2018, Datong Hydro-Yunding Hydropower Technology, a subsidiary of Datong, won a fuel cell contract for 300 buses in Datong, Shanxi, which will be delivered within 2019. The contract is worth about 500 million yuan and is expected to thicken the company's performance. In 2019, the company streamlined its business and concentrated capital resources to strengthen fuel cells. Consider the company's first-mover advantages and overall layout, optimistic about the growth of the company's fuel cell business.

Risk factors: technological breakthroughs are not as expected, the promotion of fuel cell vehicles is not as expected, and policy support is not as expected.

Investment suggestion: the company's lead-acid battery business is improving steadily, and the business value of lithium-ion battery is realized, both of which build the margin of performance safety. The company's fuel cell business is in a leading degree of commercialization, and the layout of the industrial chain is high-quality and perfect. We are optimistic about the growth of the company's fuel cell business. We predict that the EPS of the company from 2019 to 2021 will be 0.49 PE 0.56, corresponding to 42-37-30 times PE. Based on the segment valuation analysis, the reasonable target market value of the company in the coming year is expected to be 8.3 billion yuan, and the target price will be 23.70 yuan, corresponding to 55 times of 2019. Coverage for the first time, giving a "overweight" rating.