Short-term pressure on 2019 results. Focusing on the company's long-term growth potential, the company achieved revenue of 16.6 billion yuan/yoy +4%, net profit of 860 million yuan/yoy -17% in Q3, revenue of 5.9 billion yuan/yoy +5% in Q3, and net profit of 250 million yuan/yoy -34%. Performance was lower than our expectations; competition in the elevator industry is still fierce, and gross margin pressure is the main reason for the year-on-year decline in performance. We believe: 1) The domestic elevator market is expected to maintain steady growth, and the installation of elevators in old neighborhoods is expected to contribute some incremental demand. Aftermarket service revenue may be a new growth point, and the company's elevator business still has medium- to long-term growth; 2) The future of new industries such as precision speed reducers is bright, and the multi-dimensional layout of advanced manufacturing at the group level is expected to form a synergy, and sufficient cash on hand ensures long-term competitiveness. We expect EPS to be 1.09, 1.14, and 1.20 yuan in 19-21, maintaining the “gain” rating. The significant decline in gross margin level compared to the previous year was the main reason for the decline in performance. In the medium to long term, 2019Q1-3 has a gross profit margin of 16.54% /yoy-3.2pct, a net profit margin of 5.18% /yoy-1.3pct, and a net cash flow of 175 million yuan from operating activities, which is better than the same period last year - 220 million yuan. Q3 single quarter gross profit margin 16.27% /yoy-3.0pct, net profit margin 4.26% /yoy-2.5pct. Affected by factors such as high raw material prices and overcapacity, competition in the elevator market in 2019 was still fierce. The gross margins of companies in a single quarter from 2018Q1 to 2019Q3 showed a downward trend of 20.36%, 19.78%, 19.25%, 17.18%, 17.08%, 16.44%, and 16.27%, respectively. However, as the downward price trend stabilized, the decline in 2019Q3 gross margin improved. We believe that as a local leader, the company's ability to control the cost side is better than the industry as a whole. At the same time, the share of service revenue has increased, and medium- to long-term gross margin may be repaired. The renovation of old neighborhoods is expected to contribute to incremental demand. After-market service revenue or new growth points. Although competition in the traditional new elevator market is fierce, the company is also welcoming new opportunities: 1) Elevators are one of the important elements in the renovation of old neighborhoods. Currently, many governments in Beijing, Shanghai, Guangzhou, Hangzhou and other parts of the country encourage and support the installation and support of elevators in people's livelihood projects. The company has now launched a one-stop elevator installation service for the entire life cycle, including early professional processing procedures, mid-term installation and construction, and post-elevator installation and maintenance. According to the company's announcement, in 2018, the old company completed the elevator installation and maintenance of 3000 elevators Taiwan is expected to grow by more than 30% in 2019. 2) The share of service revenue of Chinese elevator companies is generally lower than that of overseas leaders. The company is speeding up the expansion of the elevator aftermarket. In 2019, H1's revenue from service industries such as installation and maintenance exceeded 3.2 billion yuan, accounting for more than 32% of revenue, showing a steady upward trend (30% in 2018). Leading elevator manufacturing companies with a diversified layout maintain a “gain” rating. Taking into account the effects of intense competition in the industry and falling prices compared to the same period last year, we revised the company's gross margin forecast. The company is expected to achieve net profit of 11.2, 11.7 billion yuan, and 1.23 billion yuan (previous values of 13.3, 1.47, and 1.63 billion yuan), respectively, corresponding to PE of 16, 15, and 14 times. The average PE of Elevator Comparable Company in 19 years was 20 times. Considering that the compound profit growth rate of the comparable company in 19-21 was high (wind agreed expectations: Kangli Elevator, Huahong Technology, and Guangri Co., Ltd. were 191%, 36%, and 63% respectively), we comprehensively considered the company's own growth and gave a reasonable PE valuation 16 to 20 times in 2019, corresponding to the stock price range of 17.44 to 21.80 yuan. Risk warning: The growth rate of real estate investment fell short of expectations; the renovation and installation of elevators in old neighborhoods fell short of expectations; the promotion and layout of new industries and products fell short of expectations; and the price of raw materials rose above expectations.