Introduction to this report: The three-quarter report's performance fell short of expectations, increased credit impairment losses, and improved cash flow. Shanghai's state-owned assets reform has improved markedly, the company's incentive system is expected to improve, and the dividend rate is expected to increase in the future. Investment highlights: Conclusion: The three-quarter report's performance was lower than expected, credit impairment losses increased, and cash flow improved. The elevator industry has bottomed out and is recovering, and the company's profits need to be repaired. The controlling shareholder, Shanghai Electric, has introduced equity incentives. The company's incentive mechanism is expected to improve, and the dividend rate is expected to increase in the future. Considering that the company's three-quarter report performance was lower than expected, the 2019-2021 EPS was reduced by 1.12 (-0.14), 1.31 (-0.21), and 1.49 (-0.25) yuan, and the target price was lowered to 21.0 yuan, corresponding to 16 times PE in 2020, increasing its holdings. The company's three-quarter results fell short of expectations, and credit impairment losses increased. ① The company's revenue for the third quarter of 2019 was 16.61 billion yuan, up 4.43% year on year; net profit to mother was 861 million yuan, down 16.6% year on year; net profit after deducting non-return to mother was 836 million yuan, down 18.1% year on year; performance was lower than expected. 2019H1 Shanghai Mitsubishi's net profit was 684 million yuan, down 22.4% year on year; ② The company's gross profit margin for the first three quarters was 16.5%, down 3.2 percentage points year on year; net profit margin to mother was 5.18%, down 1.3 percentage points year on year. Credit impairment losses of 130 million yuan in the first three quarters have exceeded 124 million yuan for the full year of 2018. ③ Net cash flow from operating activities in the first three quarters was 175 million yuan, a significant year-on-year improvement. Shanghai's state-owned assets reform has clearly accelerated, and the company's incentive system is expected to improve. ① On May 6, Shanghai Electric granted equity incentives worth approximately 400 million yuan to 2,200 employees, including executives. ② Currently, 85% of the competitive state-owned enterprises in Shanghai have formulated incentive plans; as an important subsidiary of Shanghai Electric, the incentive mechanism is expected to improve. Since 2015, the subsidiary Shanghai Mitsubishi's dividend rate has continued to be above 91%; it is expected that as the incentive mechanism improves and more vitality is released, the company's dividend rate will increase. Catalysts: Improvement of incentive mechanisms, extension of intelligent manufacturing. Risk warning: The risk of a sharp decline in new real estate starts, increased industry competition, and declining investment returns.