Company news The company announced on October 8, 2019 that it won the bid for the State Grid Evergrande third-generation AC charging pile project. The company expects to deliver 200 sets of trial production products on November 30, 2019. The demand is expected to be about 30,000 units in 2020, and the demand for about 300,000 units in the next five years. Commenting on the establishment and signing of a leading real estate enterprise by State Grid Evergrande, community parking garage charging is expected to usher in integrated platformization. State Grid Evergrande was officially unveiled on July 28, 2019. State Grid and Evergrande Group each hold 50% of the shares and have signed service cooperation agreements with Country Garden, Vanke, Sunac, and Evergrande, which can serve 5,468 communities, 8.72 million households, and about 31 million owners across the country1. We believe that the collaborative promotion of leading housing enterprises and the State Grid's ability to optimize capacity on the power grid side will drive: 1) Community parking garage charging to form comprehensive platform-based management to optimize service quality and charging quality 2) promote the expansion and transformation of low-capacity communities, add charging facilities, and 3) be guided by leading housing enterprises to increase the support rate of newly built community charging stations. The construction of private piles is speeding up, and the market space for residential charging piles is vast. As of August 2019, a total of 625,000 private piles have been built in China, an increase of 260,000 over the previous year. The growth rate reached 71%, which is higher than the growth rate of public piles. 1H19 China has 3.44 million new energy vehicles, and the ratio of private piles is 5.8, so there is a lot of room for improvement. We believe that compared to the convenience of charging electricity brought by public fast charging, private slow charging is an important part of improving the user experience and reducing daily vehicle costs in the daily use of electric vehicles in the future. With the further increase in sales of new energy vehicles, we believe that the replacement of existing vehicles, the normalization of car-mounted piles for new vehicles, and pre-set charging piles for residential parking spaces will accelerate the growth in the number of private charging stations. It won the exclusive bid for State Grid Evergrande, entered the broad market for charging piles in the community, and took sales of charging pile equipment to the next level. The company is the sole supplier of equipment in this tender, and the company expects a supply of 300,000 units over 5 years. The company is also the main charging pile supplier for Didi Xiaoju, and recently won the bid for 15.5 million yuan charging equipment for Zhejiang Petroleum Comprehensive Energy. Together with major customers, the company's charging pile equipment sales are expected to rise to the next level. We believe that winning the bid will have little impact on the 2019 results, but it will boost the results in 2020 and beyond. Valuation recommendations We believe that winning the bid has strengthened the company's competitive position in the field of charging pile equipment. The current stock price of the company is 12.31 yuan. We maintain our profit forecast of 137/214 million yuan in 2019/2020, corresponding to 50.8/32.4x P/E in 2019/2020. Maintaining a target price of 13.8 yuan, corresponding to the 2019/2020 57/36x P/E, there is 12% room to rise, maintaining the industry rating. Risk The actual bidding situation for State Grid Evergrande charging piles fell short of expectations, the completion of HVDC business orders fell short of expectations, and the 5G communication power system tender fell short of expectations