Report summary: With the “one network, one platform” strategy as the core, the company deepens the “1+N” industrial layout, the company deepens the “1+N” industrial layout, takes mobile distribution business as the core, builds the company's core competitiveness, drives collaborative development in various sectors of lottery, mobile Internet, mobile resale, and liquor sales, and implements a “two-wheel drive” strategy for industrial management and capital operation. At the same time, industrial collaboration is strengthened through capital management, industrial development is promoted through investment, mergers and acquisitions, new businesses are gradually superimposed, and the industrial chain layout is improved. Revenue in 2018 was 42.47 billion yuan, up 7.2% year on year, and gross margin declined slightly. It was 3.3%. The company's total revenue in 2018 was 42.47 billion yuan, up 7.2% year on year, and net profit loss of 230 million yuan, mainly due to impairment of goodwill and marketable financial assets. The company's overall gross margin is 3.3%. There has been a downward trend in recent years, from 4.4% in 16/17 to 3.3% in '18. 2019 Q1 performance: The company's Q1 revenue in 2019 was 10.2 billion yuan, down 2.3% year on year, and net profit was 112 million yuan, a year-on-year growth rate of 187%. The mobile phone distribution business remained stable. In 2018, the gross profit margin of mobile phone sales was 1.7%. The company's mobile phone distribution business mainly consists of two major businesses: mobile phone sales and mobile phone maintenance. The revenue of the mobile phone sales business in 2018 was 41.1 billion yuan, an increase of 7% over the previous year, and remained stable overall. The profit situation is under slight pressure, with a gross margin of 1.7%, mainly due to intense competition among online mobile phone sales channels, major manufacturers, major retailers, and major channel providers. The mobile phone repair business was relatively stable with revenue of 160 million yuan in 2018, an increase of 42% over the previous year. The gross margin increased significantly in the last two years. The gross margin in 2018 was 47%, but the volume was relatively small. The lottery business is the main growth point. The revenue of the company's lottery business in 2018 was 4300 million yuan, up 18.8% year on year, and gross margin was 53%. Since the merger in 2016, the growth rate has been stable. Basically, it has maintained a growth rate of about 20% every year, while its profitability is relatively good. The lottery business is the company's future strategic focus. As of 2018, the company's lottery products have covered 29 provinces, municipalities directly under the Central Government, and autonomous regions in China, provided a full set of computerized lottery ticket sales systems to 13 customer provinces, and opened up 6 overseas markets. Investment recommendations We predict that the company's net profit for 2019-2020 will be 153 million yuan, 186 million yuan, and 293 million yuan respectively, and EPS will be 0.15 yuan, 0.18 yuan, and 0.28 yuan respectively, corresponding to the current stock price PE of 38X, 32X, and 20X. Risks indicate lottery policy risks; mobile phone sales are not as expected; lottery business is not progressing as expected, etc.