Core view: Performance for the first half of 2019 is forecast to increase, with significant year-on-year growth. The company disclosed the performance forecast. It is expected that net profit of 336 million to 386 million yuan in the first half of 2019, an increase of 105% to 135% over the previous year; net profit after deducting non-return net profit is 217 to 255 million yuan, an increase of 70% to 100% over the previous year. Non-recurring profit and loss is mainly due to an increase in income from changes in the fair value of Great Wall Securities shares held, which is expected to affect net profit of about $98 million. The company's performance improved markedly year over year. Exchange+material prices+increase in the share of independent brands. The trend of improving performance is expected to continue. We believe that the improvement in the company's 2019H1 performance is mainly due to the following reasons: First, the exchange rate of RMB against the US dollar in 2019Q2 is generally on a depreciation trend, and the exchange ratio (USD to CNY) is higher than the same period in 2018. Direct exchange benefits are also driving the gross margin; second, the prices of major raw materials in 2019H1 (such as aluminum, packaging materials, etc.) are also on a downward trend; finally, the company's own brand business share is also increasing. Gross margin is higher, and profitability has also increased. Profit forecasts and ratings In 2019, taking into account income from changes in fair value, the company's EPS for 19-21 is expected to be 0.40/0.37/0.43 yuan/share, respectively. If income from changes in fair value is not taken into account, the net profit growth rate for 19-21 is expected to be 31%/7%/16%, respectively. Among companies in the same industry, OPP Lighting, which has a brand, is 22.2X/18.6X for PE in 19-20, respectively, while Debon Lighting, which mainly engages in OEM, corresponds to 15.4X/13.3X PE in 19-20, respectively. Considering that the net profit of Sunshine Lighting in 2019 was disrupted by factors that fluctuated in fair value, and referring to PE expectations from companies in the same industry in 2020, we believe that Sunshine Lighting's 2020 PE should fall between OPP Lighting and Debon Lighting. The average value of the latter two is about 16X. We gave the company a PE valuation of 16 times in 2020, corresponding to a reasonable value of 5.92 yuan/share, and gave the company a “buy” rating. Risk indicates the risk of falling product prices; the risk of rising raw material prices; and the risk of transformation failure.