Investment highlights: Industry event 1: Ministry of Transport website announced on November 4, 2019, that 5.4323 million new ETC users were added nationwide (average 679,000 per day), completing 118.35% of weekly tasks. Since May 15, a total of 76.024,000 new ETC users have been added nationwide, and 69% of the 11.1788 million new distribution tasks have been completed. As of October 31, the total number of ETC users nationwide reached 156.692 million, completing 82.1% of the total distribution target of 19.085556 million. Industry event 2: Apple released a new generation of Bluetooth headphones, AirPods Pro, with a domestic price of 1999 yuan. The biggest feature of this upgrade is the addition of an active noise cancellation function. According to Apple, the best sound effect can be adjusted automatically, and the touch-controlled headphone handle can be switched between noise reduction mode and transparency mode. Company events. On October 29, the company announced the 2019 Q3 quarterly report, with 19Q3 revenue of 480 million yuan, yoy +291.13%; net profit to mother of 109 million yuan, yoy +430.51%; 19Q3 gross profit margin of 36.61% and net sales margin of 22.66%. Currently, the average number of new ETC users per day is still at a high level, and the company will continue to benefit. We mentioned in our report “ETC drives revenue growth in 19Q2 while providing strong guidance for 19Q3”, “We estimate that the average number of ETC users increased by around 690,000 per day from August 14 to 27, far exceeding the average daily average of 46,000 in 19Q1. We estimate that the number of new ETC users added in 19Q3 is expected to increase significantly from month to month.” Based on the number of ETC users recently announced by the Ministry of Transport in Industry Incident 1, the current average daily completion volume is about 679,000, which is still at a high level compared to 19Q3. We judge that the company will continue to benefit from the rapid growth in the number of ETC users. Apple's AirPods Pro continue to ignite the TWS trend, and the company will also benefit. AirPods Pro has added an active noise cancellation function, which can switch between noise reduction mode and transparent mode. We believe that AirPods Pro's breakthrough in noise reduction will lead the TWS industry to continue improving its functionality. Combined with Trendforce forecasts, TWS shipments are expected to reach 78 million units in 2019 and 110 million units in 2020. The TWS industry continues to explode, and we believe the company will continue to benefit. In 19Q3, the company benefited from high ETC revenue and profit growth. The company's 19Q3 revenue was 480 million yuan, yoy +291.13%, net profit to mother of 109 million yuan, yoy +430.51%, driven by national policies, increased sales volume of ETC products, and increased demand in the related Bluetooth market. Revenue growth was in line with our expectations. 19Q3 gross margin also increased by 1.69pct month-on-month, but the improvement was less than we expected. Profit forecast. We lowered the company's gross margin assumption and predicted that the company's EPS for 2019 to 2021 would be 2.19, 3.22, and 4.13 yuan/share, respectively. We gave the company PE (2019) 50 to 57x, corresponding to a reasonable value range of 109.50 to 124.83 yuan per share, and gave the company PS (2019) a range of 12.00 to 13.50x, corresponding to a reasonable value range of 110.16 to 123.93 yuan per share, carefully considering our belief that the company's reasonable value range is 109.50 to 123.93 yuan/share, maintaining a “superior to the market” rating. Risk warning. New competitors may join the ETC chip industry in the future.