It is full of ups and downs, and the transformation of high and low voltage electrical appliance testing leaders has focused on electrical testing for more than 50 years. It has a rich heritage. Currently, it has the advantage of a “one-stop” testing service with full coverage of high and low voltage. The market share of high and low voltage testing is number one. In the future, low voltage demand is stabilized+high voltage demand is growing, and the company's market development+competitiveness boosts market share, driving the company's revenue growth. The company's high capital expenditure is about to enter a period of contraction. High operating leverage is driving high profit growth. The estimated EPS for 2019-2021 is 0.22/0.29/0.41 yuan. Referring to the 19-year average P/E34x of comparable companies, a target P/E of 33-34x was given in '19, with a target price of 7.26-7.48 yuan/share, covering “purchases” for the first time. Low voltage demand is stable, and high voltage diversification is growing. The traditional downstream customers of electrical appliance testing are mainly electrical manufacturing enterprises/electrical grid systems, etc., which are directly related to the national power plan and the level of prosperity in the electrical appliance industry. The diversified growth comes from new energy/automobiles/military industries. Low voltage testing: Mandatory testing+commissioned testing. In '17, China's low voltage testing market reached 1 billion (the market share of the Academy of Electrical Sciences was 14%). The market capacity has remained relatively stable in recent years, and the incremental space comes from transmission and distribution grid construction and product upgrades. High voltage testing: The market size was 1.9 billion in '17 (the Institute of Electrical Engineering accounted for 24%, and the company's high voltage testing business in 15-17 had an average compound annual growth rate of 35% vs. 8% of the industry as a whole), benefiting from the UHV restart and rising demand for new energy (wind and solar power) /automotive electronics and electrical testing. The company is currently actively developing the market and has potential for growth. Heavy asset attributes, the transformation from high investment to high profit growth, the electrical appliance testing industry is a typical asset-heavy industry. The company's high investment over the past few years has enabled its inspection capabilities in the subfield to reach many world firsts. The main costs are depreciation and labor costs (66%/22% of costs in 2018). The increase in depreciation costs brought about by the implementation and consolidation of major projects has caused the company's net interest rate to fluctuate greatly, but EBITDA maintained a relatively rapid growth rate. The CAGR reached 31% in 2016-2018, and the EBITDA profit margin increased from 56% to 66%. The profit margin in '18 fell by 1.5pct to 18.1% year on year due to the consolidation of several projects at the end of '17, and the peak of capital expenditure in '19 is about to enter a period of contraction, and an inflection point in performance is beginning to show. According to the plan, most of the company's projects under construction are expected to be completed within 2020, and depreciation expenses are expected to reach the highest in 2021, and the company's transformation from high investment to high profit growth. Operating leverage is high, profit release is accelerated, and the company's asset turnover ratio has been rising steadily since '16 to 0.19 in '18 (SGS/Intertek/Huacou/China Automobile Research, 1.1/1.3/0.7/0.5, respectively), and there is still plenty of room for improvement. The company's 18-year operating leverage factor ((EBIT+fixed cost) /EBIT) was as high as 2.6 times. High operating leverage leveraged high profit growth, so that in 2021, while revenue increased 57% over 2018, net profit increased 1.42 times compared to '18, and net interest rate increased from 18% to 28% (taking only endogenous growth into account). The performance inflection point is approaching. For the first time, it is covered by a “buy” rating. The target price is 7.26-7.48 yuan. The electrical appliance testing industry where the company is located has stable demand, asset heavy attributes, and qualification barriers to build competitiveness. As a leader in the field of low voltage/high voltage testing, 19 capital expenditure has reached a high point, and operating leverage has led to an increase in profit margins (profit growth is faster than revenue growth). Net profit is expected to return to net profit of 170/2.16/310 million yuan in 19-21, corresponding to EPS of 0.22/0.29/0.41 yuan. The current stock price is 0.22/0.29/0.41 yuan. /21x/15xP/E, referring to the average P/E34x valuation of comparable companies in '19, gave the company a target P/E of 33-34x in '19, corresponding to the target price of 7.26-7.48 yuan/share, covering the “buy” rating for the first time. Risk warning: risk of shrinking market capacity, risk of declining brand credibility, business development falling short of expectations.