1. Smart street lights have become an important carrier for 5G site resources & smart cities. The trend of value increase & operation opens up room for long-term growth. Light poles have the natural advantages of supplementing 5G network site resources and becoming an important carrier for smart cities: 1) widely and evenly distributed with population density to meet the networking density requirements of 5G small stations; 2) Appropriate height, good coverage when the 5G small base station mounts at 10-15m. The height of the light pole is generally 9-15m, which is just the right match; 3) The geographical coordinates are accurate, making it easy to maintain and manage; 4) The power supply network is complete and convenient for construction. We expect the unit price of smart street lights to be about 6 to 10 times that of traditional street lights, directly driving a significant increase in the market size of the industry. Due to the increasing complexity of smart street lighting systems and the government and related institutions preferring to buy services, project operation outsourcing is expected to become the mainstream business model. A large amount of capital is required in the early stages of the operation project, but the cash flow is relatively stable in the later stages. 2. The entry of giants prompted the development of the industrial chain to reach an inflection point: According to our estimates, the penetration rate of smart street lights in China was only 0.05%. We believe that the main reasons for the slow progress of the industry previously included 1) insufficient effective demand, 2) cloud platform vendors and integrators were not strong enough. At present, China Tower has reached cooperation with Huati Technology, Power Grid, etc. to provide a demand base for smart light poles. In addition, equipment vendors, integrators, and cloud vendors such as Huawei and Tencent have entered the market one after another, and integrated system solution capabilities have been greatly improved, and the industry's growth rate is expected to reach an inflection point. 3. Huati Technology: Scarce developers in the entire industry chain, and with giants using “light pole+operation” two-wheel drive, performance is expected to continue to grow rapidly. The company's business covers all aspects of the industrial chain, such as design, street lights, light poles, and integration. It is the only domestic listed company with a full industry chain layout and focuses on the field of lighting. The company is now cooperating with giants such as Tower, Huawei, and Tencent, and is expected to share the dividends of the rapid development of the industry. At present, the total amount of smart street light projects won by Huati exceeds 2.6 billion yuan, and the first smart street light operation project has been successfully implemented. In view of the company's unique competitive advantage, we are optimistic that its performance will be further improved under the “smart street light+project operation” development path. 4. Profit forecast and investment advice: We expect the company's achievable EPS in 2019-2021 to be 1.46, 2.27, and 2.97 yuan respectively. The current market value is only 19 times PE in 2020. For the first time, coverage was given a “highly recommended” rating. 5. Risk warning: The company's order status falls short of expectations, 5G smart street lights are not progressing faster than expected, the company's gross margin falls short of expectations, and tight cash flow.