The 3Q19 results are in line with expectations, and Yinfei Storage announced 3Q19 results: operating income of 106 million yuan (-18% YoY), gross profit of 0.39 million yuan (-5% YoY), and net profit to mother of 014 million yuan (-7% YoY), corresponding to earnings of 0.05 yuan per share, which is basically in line with expectations. In terms of ratio, gross profit margin increased 4.9ppt to 36.6%, and net profit margin increased 1.6ppt to 13.3%. The decline in revenue but the increase in profit margins was mainly due to a slight decline in the number of orders settled in the third quarter, but most of the settlement items were high-margin varieties. In addition, sales expenses, management expenses, and R&D expenses fell by 43%/8%/19%, respectively, and the company managed costs effectively in a sluggish macroeconomic situation. In terms of cash flow, 1-3Q19 had a net operating cash outflow of 60 million yuan, a slight increase compared with the net outflow of 200 million yuan in 3Q18. By the end of the third quarter, the company's monetary capital was 120 million yuan, down from 170 million yuan in 2Q19 and 340 million yuan in 3Q18, mainly due to increased accounts receivable. Follow the development trend: the additional production capacity of the Maanshan project will be implemented one after another in 2020/21: the total investment of the project is 1 billion yuan, and the additional shelf production capacity will reach 100,000 tons after completion. Currently, construction of the project has already started, and we expect partial production to be put into operation as early as the fourth quarter of 2020. If production capacity is fully released, we believe it is expected to contribute 1 billion yuan in revenue. The company's average gross margin/net profit margin from 2012 to 2018 was 34%/13%, respectively. We believe this production line expansion may contribute 340 million gross profit and 130 million net profit. The company may introduce external dealers to expand the shelf market: as production capacity expands significantly after 2021 (original production capacity 90,000 tons, additional 100,000 tons), the previous sales model was difficult to match enough incremental customers, and the company may change to a model combining direct sales and distribution. The company will build an intelligent logistics robot and automated warehousing system manufacturing center in the Binhai New Area of Nanjing: the total investment of the project is 300 million yuan. We expect to complete it in the second half of 2021. At that time, it is expected to further strengthen the company's product advantages and increase its market share. The profit forecast and valuation took into account adjustments in the company's production capacity investment pace this year and next, and we lowered 2019/20e profit by 7%/19% to 1.01 billion yuan. The current stock price corresponds to 23.3/20.4 times the 2019/20 price-earnings ratio and maintains a neutral rating. Due to an upward shift in the market valuation center, the target price is 7.50 yuan, which corresponds to 22.3 times the 2019 price-earnings ratio and 19.4 times the 2020 price-earnings ratio. There is 4.6% downside compared to the current stock price. Risk macroeconomic stagnation, inventory backlog, and sharp fluctuations in steel prices.