The company released the 2019 three-quarter report: the first three quarters achieved revenue of 622 million yuan, a year-on-year increase of 7.23%; realized net profit of 62 million yuan, a year-on-year decrease of 29.93%; net profit of 56 million yuan, a year-on-year decrease of 30.36%; gross profit margin of 37.73%, a year-on-year decrease of 2.31 pct; and a net profit margin of 9.46%, a year-on-year decline of 5.05 pct. On a quarterly basis, the third quarter achieved revenue of 245 million yuan, a year-on-year increase of 4.50%; net profit of 221 million yuan, a year-on-year decrease of 56.50%; net profit after deduction of $19 million, a year-on-year decrease of 58.41%; gross profit margin of 35.40%, a year-on-year decline of 8.78 pct; and a net profit margin of 8.42%, a year-on-year decrease of 11.16 pct. The performance fell slightly short of market expectations. Net interest rate declined significantly due to declining gross margin plus higher expenses during the period, and operating cash flow needed to be improved. The company's sales/management (including R&D) /financial expenses for the first three quarters were 0.59/1.21/-0.09 billion yuan, a year-on-year change of -3.53%/+6.08%/+43.30%, and the three fee rates were 9.52%/19.53%/-1.51% respectively. The period fee rate was 27.53%, up 1.22pct year on year. The increase in the period fee rate and the decline in gross margin led to a 5.05 pct decline in the company's net interest rate in the first three quarters. The company's net operating cash flow for the first three quarters was -031 million yuan, a sharp decrease of 78.32% from the previous year, mainly due to the year-on-year increase in cash payments related to operating activities. The dominant position of charging piles is highlighted, and the entire “car+pile+aftermarket” industry chain is laid out. In September 2019, the company won the bid for a competitive negotiation and procurement project for electric vehicle charging piles at Zhejiang Petroleum's integrated energy supply service station, with a bid amount of 15.5006 million yuan, ranking first with a share of 55% (according to amount), highlighting its advantageous position; in October 2019, the company became the only equipment vendor for the third-generation AC charging pile tender project of the State Grid Evergrande Smart Energy Service Company (intended to win the bid). It is expected to deliver 200 sets of pilot products by the end of November. The demand for the next five years is expected to be 300,000 units. While contributing sufficient driving force to the company's future operations, it is vigorously promoting “car+pile+” The layout of the entire “aftermarket” industry chain. HVDC has benefited from increased demand for 5G+IDC, and support for energy interconnection platforms is being promoted everywhere. The company has been deeply involved in the field of communication power supplies for many years, and is a leader in high-voltage DC power supply technology (HVDC). The current 5G base station layout is accelerating, which is expected to generate more than 50 billion yuan of power demand space for 5G base station communication equipment; distributed computing scenarios such as global big data are rapidly expanding, bringing significant increases in data center power demand. The company began laying out an energy Internet platform in 2012 to create an industry player focusing on the energy Internet. Currently, ubiquitous construction is progressing comprehensively. The company will fully support ubiquitous promotion through the Energy Internet Research Institute platform and ubiquitous power IoT solutions. Investment suggestions: The company has been deeply involved in power electronics and power informatization for many years, and has obvious advantages in the fields of electric vehicle charging stations and HVDC. The current situation benefits from 5G construction, accelerated demand for IDC power supply, comprehensive “ubiquitous” promotion, and energy Internet construction. We expect the company's net profit in 2019-2021 to reach 129/1.90/253 million yuan, EPS of 0.23/0.34/0.45 yuan respectively, and PE corresponding to the closing price of October 29, 2019, 53.2/36.0/27.1 times, respectively, maintaining an increase in holdings rating. Risk warning: NEV production and sales fall short of expectations, 5G investment falls short of expectations, macroeconomic growth rate falls short of expectations