The performance review maintains neutral 3Q19 results and forecasts. The company announced 1-3Q19 results: revenue of 400 million yuan, a year-on-year decrease of 3.8%, and net profit of 110 million yuan, corresponding to earnings of 0.34 yuan per share, a year-on-year decrease of 10.7%, mainly affected by falling rare earth prices and declining investment income. 3Q19's revenue was 150 million yuan, down 5.8% year on year, up 4.0% month on month, and net profit to mother was 38 million yuan, down 14% year on year, up 10% month on month. It was in the forecast range of 0.36-40 billion yuan, corresponding to a profit of 0.12 yuan per share. Comment: 1) The average price of rare earths rose month-on-month in 3Q19. The average price of 1-3Q19 praseodymium oxide was 308,000 yuan/ton, down 7% year on year; 3Q19 average price was 315,000 yuan/ton, down 2.8% year on year, up 3.1% month on month. 2) Gross margin declined slightly. 1-3Q19's comprehensive gross margin was 34.5%, a year-on-year decrease of 1.4ppt, 3Q19 was 34.4%, a year-on-year decrease of 1.9ppt, and a month-on-month decrease of 0.7ppt. 3) The cost of the period decreased. The 1-3Q19 company's management+R&D+finance expenses decreased by 10 million yuan year on year, of which financial expenses decreased by 9.6 million yuan year on year, and the main benefit interest income increased by 13.81 million yuan year on year. Expenses during the 3Q19 period were -2.48 million yuan year over year, stable month-on-month. 4) Reduced return on investment. 1-3Q19's investment income decreased by 0.14 million yuan year on year, mainly due to a decrease in revenue from capital protected wealth management products due within one year. 3Q19 was 4.57 million yuan/month-on-month -0.18 billion yuan. The development trend is that rare earth prices are stable in the short term. Affected by Myanmar's import restrictions, domestic rare earth prices began to rise sharply in early May, but the current price of praseodymium oxide has been reduced by 21% compared to the June high. Recently, imports of light rare earth raw materials have been sufficient, and the growth rate of domestic demand for new energy vehicles may slow marginally at the end of the year. We expect rare earth prices to rise at the end of the year. Profit forecast and valuation We keep the company's net profit forecast of 144 million yuan and 141 million yuan unchanged for 2019 and 2020. The company's current stock price corresponds to the 2019/2020 price-earnings ratio of 38.0 times/38.8 times. Maintaining a neutral rating and a target price of 15.00 yuan, corresponding to 33.7 times the 2019 price-earnings ratio and 34.4 times the 2020 price-earnings ratio, there is 11% downside compared to the current stock price. Prices of risky rare earths have dropped sharply; demand for magnetic products is weak.