Event: The company recently announced its results for the first half of 2019: operating income from January to June 2019 was 2,792 billion yuan, up 12.59% year on year, and net profit attributable to shareholders of listed companies was 284 million yuan, up 100.44% from the same period last year. The company expects the net profit achieved in the first three quarters of 2019 to increase significantly compared to the same period last year, mainly due to the company's expected increase in investment income confirmed in the first three quarters of 2019 for the joint venture Hitachi Elevator compared to the same period last year. Comment: The company's profit in the first half of 2019 mainly benefited from Hitachi's investment income: the company mainly engages in elevator sales and maintenance, elevator parts, etc. According to business classification, elevator parts, intelligent manufacturing equipment, LED, logistics, packaging, installation and maintenance accounted for 44.51%, 28.69%, 1.83%, 142%, 8.83%, 6.52%, and 6.1% of revenue in 2018. The increase in 2019H1 revenue was mainly due to the increase in production and sales volume compared to the same period last year, and the rapid increase on the profit side was mainly due to the increase in investment income brought by Hitachi. In 2018, H1 investment income was only 104 million yuan, and 2019Q1 investment income reached 264 million yuan, a significant increase. Mainly, Hitachi's business conditions improved, while the headquarters looked at the 2019 H1 revenue of 2,792 billion yuan (+12.59%), with a gross margin of 14.07%, a year-on-year decline of 0.2 pct. On the cost side, management expenses, sales expenses, financial expenses, and R&D expenses were 0.8 (-1.63%), 1.81 (-4.4%), -0.1, and 1.16 (+31.49%), respectively. Judging from the balance sheet, the company's 2019 Q1 inventory was 940 million yuan, up 23.1% year on year, mainly for raw materials. Advance income was 671 million yuan, up 13.5% year on year and 5.83% month on month. As competition intensifies, the company's cumulative elevator production in the country increased rapidly year-on-year in the first half of 2019, but steel prices during the same period were still high compared to previous years. First-tier brands began to seize the middle and lower end markets through price competition and market expansion, further squeezing the living space of second- and third-tier elevator brands, and the elevator market as a whole faced greater operating pressure. In terms of channels, dealers focus on the quality and quantity of annual authorized dealers, with the number of authorized dealers increasing by more than 10%; strategic customer order amounts reached a record high, up 81% year on year, and have successfully signed high-end projects such as the Zhuhai Hengqin Sino-Portuguese Trade Center and Huichuan Technology Headquarters. The company's elevator marketing engineering service network has a total of 35 sub-branches, 18 service centers, 40 offices and a growing dealer network. Performance benefits are logically interpreted on the completion side. According to data from industry associations, the sales volume of the elevator industry in 2014-2018 was 71.4, 76, 78.6, 80.7, and 850,000 units, respectively. The growth rate in recent years has fallen back to single-digit growth, mainly due to real estate. Elevator market demand is mainly divided into 3 areas, including commercial housing, public construction demand (government office buildings, business hotels, transportation, medical care, education, etc.), and industrial construction. Among them, commercial housing accounts for about 85% of elevator market demand, so the impact is greatest. However, due to the high degree of standardization in elevator manufacturing, it is generally close to housing Since completion begins procurement, elevator sales are highly correlated with the completion end. According to data from the National Bureau of Statistics, the cumulative increase in real estate completion area (%) from January to July 2019 was -11.3%, and the decline is expected to narrow in the future. We believe that the completed end is still expected to see an improvement in the second half of the year. Elevator production in January-July reached 650,000 units, an increase of 4.6% over the previous year, and the new elevator market growth is expected to continue until 2020. The elevator components, elevator components, and Hitachi's investment income of Guangri Co., Ltd. are all expected to benefit from this. Hitachi Elevator's 2019 H1 revenue reached 11.46 billion yuan, up 28% year on year, operating profit reached 1.26 billion yuan, up 150% year on year, and net profit reached 1.06 billion yuan, up 153% year on year. The rest of the business has maintained steady development: the company has carried out a certain diversified layout. We expect all main businesses to develop steadily, and Songxing Electric is expected to experience relatively rapid growth. 1. Songxing Electric has made some achievements in cross-industry layout this year, mainly some intelligent inspection equipment for high-speed railways. The EMU underbody inspection robot system developed by the holding subsidiary Songxing Electric passed the final technical review by China Railway Corporation in March of this year. Currently, high-speed rail systems such as the Shanghai Hongqiao Railway Station, Chengdu Railway Station, Sanya Railway Station, Zhengzhou Railway Station, and Guangzhou East Railway Station are undergoing trial operation combining machine inspection and human inspection. 2. LED business: To maintain steady development, the company is cautious about accurate qualifications and payment requirements. 3. Three-dimensional garage: The company has outstanding technical advantages. Currently, competition is fierce. At present, this area will maintain steady development. 4. The maintenance business will grow rapidly in recent years, and maintenance services have good profitability. Profitability forecasts and valuations. We expect the company's net profit attributable to shareholders of the parent company in 19-21 to be 4.77 (increased profit due to Hitachi's performance exceeding expectations), 6.67, and 790 million, respectively, and EPS of 0.55, 0.78, and 0.92, respectively, corresponding valuations of 15, 11, and 9 times, maintaining an increase in holdings rating. Risk warning: Downstream completion end progress falls short of expectations; industrial price war intensifies