The core view is that the third quarter results were slightly lower than expected, and growth has slowed: the company achieved operating income of 175 million yuan in the 2019 Q3 quarter, an increase of 24.37% over the previous year; net profit attributable to shareholders of listed companies was 0.2 billion yuan, an increase of 6.7% year on year; and net cash flow from operating activities was 13 million yuan, an increase of 64.90% year on year. The company achieved operating income of 483 million yuan in the first three quarters of 2019, a year-on-year increase of 22.49%; net profit attributable to shareholders of listed companies was 85 million yuan, a year-on-year increase of 16.70%; and net cash flow from operating activities was 38 million yuan, an increase of 64.03% year-on-year. Overall performance continued to grow rapidly, in line with expectations. The company's gross margin for the third quarter of 2019 was 37.81%, which was basically stable compared to the same period last year. At the same time, the company's expense ratio during the third quarter increased compared to the second quarter. The sales expense ratio, management expense rate, R&D expense ratio, and financial expense ratio were 9.86%, 6.40%, 9.18%, and -2.29%, respectively, up 1.40pct, 0.59pct, 1.89pct, and 0.92pct over the same period. The increase in the cost rate during the period was mainly due to the increase in the sales expenses rate and R&D expense ratio due to the company's increased R&D investment and sales investment. Strengthen investment in R&D and actively promote smart industries: Over the years, Keyuan Wisdom has been committed to promoting technological innovation and application innovation. At present, the company has obtained more than 200 authorized patents and more than 300 software copyrights. Relying on this, we have launched a series of solutions such as “smart industry,” “smart energy,” and “smart city,” and become an all-round smart industry leader. At the same time, the company continues to increase investment in R&D to maintain the company's technological leadership. The proportion of the company's R&D personnel reached 40%. In the third quarter, the company's R&D expenditure was 16.5937 million yuan, accounting for 9.18% of revenue. On the afternoon of June 29, 2019, the Keyuan Smart emPoworX Industrial Internet Platform press conference was successfully held. In a new round of industrial transformation, Keyuan Intelligence strengthened investment, innovative research and development, pioneered the launch of the empoworX industrial Internet platform, actively explored new models of manufacturing upgrading and industrial connectivity, and continued to lead various industries to achieve intelligent upgrading, helping the manufacturing industry reach new heights. The new project won the bid, and future development can be expected: the company was recognized as an enterprise enjoying preferential corporate income tax for key software within the national planning and layout. The corporate income tax rate will be adjusted from 15% to 10% for high-tech enterprises. In addition, a new policy to deduct 75% for R&D expenses will provide policy support for the company's development. At the same time, the company continued to win bids for new projects in the third quarter, which can be expected in the future. The company successfully won the bid for the smart power plant project of Shaanxi Energy Linbei Power Generation Co., Ltd. As the first smart power plant project of Keyuan Co., Ltd. in the northwest region, it will help Keyuan's smart power plant business fully expand throughout the country, thus creating a model smart power plant project leading development. With its strong strength, Keyuan Wisdom also won the bid for the Datang Pingluo Smart Power Plant project, further expanding its lead. The project is also an important deployment for the group company to implement the “158” strategic plan and undertakes the “Belt and Road” construction of the Ningxia Hui Autonomous Region. Investment advice: We forecast that the company's EPS for 2019-2021 will be 0.55 yuan, 0.65 yuan, and 0.75 yuan, respectively, and the corresponding PE will be 26 times, 22 times, and 19 times, respectively. Maintain a “Highly Recommended” rating. Risk warning: macroeconomic policy risk; increased market competition risk; brain drain risk; downstream capital tightening risk.