Key investment events: The company's 2019 three-quarter report revealed that Q1-Q3 achieved operating income of 2.44 billion yuan, a year-on-year decrease of 6.6%; net profit loss of 13 million yuan was realized. Among them, Q3 achieved revenue of 765 million yuan, a year-on-year decrease of 18.3%, and net profit of 51 million yuan, a year-on-year decrease of 28%, an increase of 151% over the previous year. In 19Q3, the company's gross margin was 22.23%, an increase of 9.1 pct over the previous month, mainly due to the recovery in cobalt prices in the third quarter. The three-fee rate decreased slightly, and the gross margin increased month-on-month: Q3's four-fee rate was 16.7%, down 1.17pct from month to month. The financial rate and sales rate both fell month-on-month. The company's Q3 gross profit margin was 22.2%, a year-on-year decrease of 9.11pct and a month-on-month increase of 9.1pct, mainly due to the rebound in cobalt prices in the third quarter. Due to the recovery in cobalt prices, Q3's asset impairment losses recovered to about 35 million yuan. In addition, there were also government subsidies and other income of about 100 million yuan. The number of projects under construction has increased, and the inventory scale has declined: At the end of Q3, the company's projects under construction were 380 million yuan, an increase of 62.7% over the previous year, an increase of 14.4% over the previous year. It mainly invested in the construction of a comprehensive development and utilization project for a lithium mica project and a 10,000-ton ternary precursor project. The inventory was 890 million yuan, down 36.2% year on year and 7.1% month on month, mainly because the price of raw materials fell year on year, and because demand for new energy vehicles was weak, the company controlled the inventory size. The company had short-term loans of 9.1 billion yuan and long-term loans of 150 million yuan, both declining month-on-month. Overall, due to poor industry demand, the company is in a contraction phase of inventory removal. The net cash inflow from operating activities increased sharply, and the net outflow from investment activities narrowed: the company's net cash flow from operating activities in Q1-Q3 was 537 million yuan, an increase of 401% over the previous year. Among them, the net cash flow from Q3 operating activities was 171 million yuan. The company strengthened control over the size of inventory and accounts receivable, and the cash turnover cycle was shortened. By the end of Q3, the company's monetary capital was 51 million yuan, and there was a net outflow of 34 million yuan from Q3 investment activities. The net outflow narrowed from month to month. Investment suggestion: The company's ternary precursors, cobalt salt and other businesses are all closely related to changes in cobalt prices. The rise and fall in cobalt prices has a decisive impact on the company's performance, considering the steady rise in cobalt prices next year. We expect the company's earnings per share in 2019-2021 to be 0.07 yuan/0.47 yuan/0.67 yuan respectively, maintaining the “increased holdings - A” investment rating. Risk warning: The price of cobalt has fallen sharply, and the development of the lithium battery industry has fallen short of expectations.