Matters: The company released its report for the third quarter of 2019. The first three quarters achieved operating income of 876 million yuan, a year-on-year increase of 33.84%, net profit of 121 million yuan, an increase of 35.16% over the previous year, operating income of 319 million yuan in the third quarter, an increase of 37.59% over the previous year, and net profit of 39 million yuan, an increase of 15.77% over the previous year. Comment: The market space for urban parking equipment is vast. Taking advantage of the spring policy, the company's revenue is growing rapidly. In 2015, the parking space gap in China reached 50 million, and there is still a big gap in the parking equipment ratio compared to developed countries. As the number of cars owned continues to grow, the parking space gap will expand further, and the market space for mechanical parking equipment is vast. In July 2019, the Political Bureau meeting of the CPC Central Committee proposed stabilizing investment in manufacturing, implementing shortfall repair projects such as renovation of old urban neighborhoods, urban parking lots, and construction of urban and rural cold chain logistics facilities, and speeding up the construction of new infrastructure such as information networks. The introduction of the policy further stimulated the release of demand for three-dimensional garages. The original industry pattern, which was dominated by residential and commercial complex construction, gradually changed, and the pace of public facilities and municipal parking construction accelerated, driving rapid growth in demand for mechanical parking equipment. During the reporting period, the company's business plans were carried out in an orderly manner, achieving operating income of 876 million yuan in the first three quarters, an increase of 33.84% over the previous year, and net profit of 119 million yuan, a year-on-year increase of 35.16%. This is an increase of 15.77% over the previous year. Gross margin remained stable, the expense ratio declined during the period, and the receivables turnover ratio increased. There is excess capacity in the low-end parking equipment market, and competition is fierce. However, in the high-end field, there are fewer than ten participants wrestling. The competitive pattern is even better. The company has strong R&D capabilities, and is one of the few domestic companies with a full range of three-dimensional garage qualifications. The company achieved a gross profit margin of 35.60% in the first three quarters, a slight decrease of 0.38pct over the previous year, and remained at a high level. In terms of expenses for the period, during the reporting period, the company's sales scale expanded, R&D investment increased, and loans increased. Sales/management/R&D/financial expenses reached 62.54 million yuan/57.99 million yuan/46.62 million yuan/6.69 million yuan respectively, up 15.30%/11.73%/33.28%/93.45%, respectively. Revenue scale effects led to a year-on-year decline of 1.15 pct/1.31pct/0.02pct to 7.14%/6.62%/5.25%. The financial expense ratio increased by 0.23pct to 0.76% year over year. The company achieved net profit of 121 million yuan in the first three quarters, an increase of 35.16% over the previous year, a net profit margin of 13.76%, an increase of 0.14pct over the previous year. Furthermore, as of the end of 2019Q3, the company's accounts receivable turnover ratio reached 1.30, which has improved year-on-year for three consecutive quarters. We believe this is related to the effective implementation of the company's policies to increase the collection of accounts receivable. The fixed increase passed smoothly, increased the layout of the entire smart parking industry chain, and opened up room for growth. On September 6, the company's fixed increase application was reviewed and approved by the Development and Review Committee. If the fixed increase project is successfully implemented, the company's Xuzhou and Dongguan bases will add a total of 40,000 units/year of three-dimensional garage production capacity, further improving the intelligent garage product layout. The R&D center will conduct in-depth research and development of intelligent three-dimensional garages, intelligent parking robots, and three-dimensional garage industrial interconnection by optimizing the R&D environment and upgrading R&D equipment to enhance the company's overall R&D capabilities. Furthermore, the Zhiyun Smart Parking Project will provide smart parking operation and management services through the construction of a Zhiyun system platform, application modules and Zhiyun service terminals, promote the rational allocation and effective scheduling of parking resources, and realize the exploration of existing resources. In the future, the company is expected to gradually expand the integrated construction and operation capabilities of the entire “intelligent manufacturing+parking resources+Internet” industry chain, further opening up space for growth. Earnings forecasts, valuations and investment ratings. We maintain our forecast that the company will achieve net profit of 219, 2.96 and 370 million yuan in 2019-2021. The company's fixed increase application has been reviewed and approved by the Development Review Committee. Considering the increase in share capital after the increase (assuming that the additional share capital is issued in 2020), we are preparing for the EPS 0.31, 0.35, and 0.43 yuan, corresponding to PE 21, 19, and 15 times. The pace of parking lot construction with government and social capital as investors is accelerating. The company, as an industry leader, is expected to maintain a high performance growth rate over the next three years. The PE valuation center for the past year was between 25-30 times, and was given 25-27.5 times PE in 2019 according to the lower limit range, corresponding to the target market value of 54.75-6.023 billion yuan, and the target range of 7.65-8.42 yuan, maintaining the “recommended” rating. Risk warning: Demand for mechanical parking equipment falls short of expectations, and order delivery falls short of expectations.