The company issued a 2019 performance forecast with an estimated profit of 801 million to 942 million, a year-on-year increase of 3601.77% to 4,252.61%.

The company benefited from the ETC industry construction to promote more than expected. On December 26, 2019, the 2020 National Transportation work Conference was held in Beijing on the 26th. Minister of Transport Li Xiaopeng said that in the past year, the Ministry of Transport has made every effort to promote the cancellation of provincial toll stations on highways. As of December 18, the total number of ETC users nationwide had reached 192 million, with 111 million new ETC customers and 101.25% of the ETC issuance target.

The future development of the company is driven by the demand of vehicle and road coordination in 5G era. The company signed the Strategic Cooperation Framework Agreement with Tencent Technology (Shenzhen) Co., Ltd. in August 2019. Taking advantage of their respective advantages, the two sides will conduct in-depth cooperation in V2X, multi-sensor fusion, vehicle-road coordination and self-driving, and in-vehicle terminal services based on intelligent networking system cloud in the future. Facing the 5G era, the company stores a number of product technologies in the fields of road test, intelligent vehicle terminal and management platform, which will become an important new growth point in the future.

Investment suggestion: the company's EPS from 2019 to 2020 is expected to be 6.65yuan and 5.66yuan respectively, with a buy-A rating and a 6-month target price of 95 yuan.

Risk hint: the promotion of ETC policy is weaker than expected; the competition in the industry intensifies.