Company announcement: The company announced its 2019 three-quarter report. The first three quarters of 2019 achieved revenue of 2.163 billion yuan, a year-on-year decrease of 15.19%; net profit attributable to shareholders of listed companies was 61 million yuan, a year-on-year decrease of 84.56%. Net revenue and profit declined, and there was a loss in a single quarter. The company achieved revenue of 2.163 billion yuan in the first three quarters of 2019, a year-on-year decrease of 15.19%, net profit of 61 million yuan, a year-on-year decrease of 84.56%, a year-on-year decrease of 29.62%, a year-on-year decrease of 6.96pct, a year-on-year decrease of 5.3pct; of these, 2019 Q3 achieved revenue of 549 million yuan in a single quarter, a year-on-year decrease of 52.24%, a loss of 1.24 billion yuan, a year-on-year decrease of 187.15%, and a comprehensive gross margin of 14.03%, a year-on-year decrease of 19.45 pct, a month-on-month decline 25.61 pct On the cost side, the company's R&D expenses for the first three quarters of 2019 were 307 million yuan, up 9.86% year on year, sales expenses were 187 million yuan, up 27.32% year on year, and management expenses were 154 million yuan, up 23.46% year on year. The company experienced large losses in a single quarter in the third quarter, mainly due to macroeconomic effects; the main reason for the decline in the company's performance in the first three quarters: on the one hand, the company is currently in a phase of further focusing on strategies and resources, continuing to focus on the Internet of Vehicles and the standardization of public security law enforcement, and is in a period of performance transition; on the other hand, the increase in the company's management expenses and sales expenses compared to the same period last year affected performance. The company is currently further integrating the entire group's supply chain, management upgrade, while actively increasing market share. We believe that the company's overall business has remained stable. Currently, it is in a painful period of transformation, and its performance has declined. Deepening the strategic layout of car-road collaboration, the Internet of Vehicles has remarkable first-mover advantages. The company laid out the automotive terminal and electronic license plate industry chain through the acquisition of ZTE IoT and ZTE Smart Connect in 2016 and 2018. Recently, it was announced that it plans to acquire 51% of Etex's shares by issuing shares to lay out the ETC field. In the future, it will complement the company's original OBD, T-BOX, RSU and automotive electronic signage series products. We believe that the company has gradually formed a “vehicle+roadside equipment+solution+application platform” business layout, creating a series of mass transportation products and solutions centered on front-installation/rear-mounted vehicle networking terminals and automotive electronic signage, covering important fields such as urban traffic management, urban transportation, and public travel services, and gradually realizing a large-scale transportation IoT layout covering all vehicles, roads, and people. In the future, it is expected that the company will accelerate the expansion of the car-road collaborative transportation market and seize the industry opportunities for the construction of car-road collaborative infrastructure and the application and operation of terminals in the intelligent driving industry. 5G helps the intelligent driving industry enter the eve of mass production. From the network side, 5G network slicing and edge computing capabilities make intelligent driving possible. Looking at car companies, many car companies have launched electrification platforms and started a cost war. The cost of core components has gradually declined. Internet companies have released application platforms one after another, and the intelligent driving industry is on the eve of mass production. Judging from industry trends, vehicle-road collaboration will be the only way to fully realize intelligent driving. Through car-road collaboration, vehicles can be helped to know road surface conditions in advance, thereby making optimal decision results. Through intensive construction of intelligent roads, it is possible to reduce traffic allocations and reduce bicycle costs, thereby reducing the cost of autonomous driving systems and achieving large-scale intelligent driving implementation. Investment suggestion: Gao Xing has a deep layout in the field of Internet of Vehicles. Currently, the company is in a period of strategic transformation. , concentrate resources to support the development of main waterways and achieve full coverage of “vehicle+roadside equipment+solution+application platform”. We expect the company's net profit in 2019-2021 to be 283 million yuan/391 million/477 million yuan, and EPS of 0.16 yuan/0.22 yuan/0.27 yuan respectively. Maintaining the “buy” rating. Risk warning: domestic car companies' customer expansion falls short of expectations, public security informatization bidding may be delayed risk, electronic license plate market development is lower than expected risk, market systemic risk