Events: The company released a performance report. In 2019, it achieved revenue of 2,248 million yuan, up 3.79% year on year; net profit of 331 million yuan, up 10.68% year on year; net profit of 280 million yuan, up 5.83% year on year; of this, Q4 revenue of 627 million yuan, up 11.76% year on year; net profit of 114 million yuan, up 54.1% year on year; net profit of 112 million yuan, up 75.86% year on year. Profit margins continued to improve, and the combined recovery in demand drove profits to record highs: the 2019 Q3 component inventory cycle was nearing its end, and the Q4 industry chain gradually actively pulled goods, driving the company's revenue to resume growth and ushered in an inflection point. For the company, the trend of increasing profit margins is even more important. Judging from the Q4 data for a single quarter, the net interest rate reached 18.2%, up 3.3 pct from Q3. We expect that, on the one hand, it is due to an increase in operating rate, and more importantly, after improving the product structure and increasing the self-sufficiency rate of raw materials, it will drive costs to continue to decline, which in turn will drive continuous improvement in profit margins. Looking ahead, the lighting market is expected to stabilize. Consumer electronics will benefit from a wave of switching and a continuous increase in fast charging power. Growth is expected to resume. At the same time, breakthroughs in high-end fields such as power supplies will continue, and 2020 is expected to usher in a year of great performance. There have been two breakthroughs between high-end products and clients, and a new growth cycle has begun: aluminum electrolytic capacitors are basic components. Currently, Japanese companies still dominate the high-end market. In the context of emphasizing autonomy and control and the rise of downstream terminals, demand for domestic substitution is strong. Meanwhile, the company's high-end products such as solid-state capacitors (revenue increased by nearly 30% in 2018) and MLPC have been mass-produced in batches, and a breakthrough trend in the middle and high-end markets is already there, and it is expected that they will gradually replace Japanese in the future. Comparatively speaking, although Japanese manufacturers account for more than 50% of the market, their main factories are in the mainland, and the cost side disadvantage is obvious. Profit pressure has been prominent in recent years, gradually shrinking to high-end fields such as communications, industry, and automobiles to stabilize profitability, and industry transfer to domestic leaders has brought a lot of room for growth. The company's phase II project is expected to contribute to growth in the second half of 2020, and it is worth looking forward to further penetration in the fields of communications and industry in the future. As far as the specific downstream is concerned, the consumer electronics sector has benefited from the continuous increase in the fast charging power of mobile phone chargers (flagship models in 2018 were mainly concentrated in 20-30W, and the new flagship models in the second half of 2019 were mainly concentrated in 40-60W), and the increase in stand-alone ASP was obvious. At the same time, the company completed direct procurement work for major customers one after another on the client side, and the trend of rapid increase in volume and price was obvious; the industrial sector, benefiting from a strengthened sense of autonomy and control, is expected to complete a breakthrough in major customers in 2020; in the lighting sector, the low level stabilized, and is expected to gradually pick up in the future, the company ushered in a new round of growth cycle. Build a new intelligent chemical plant and continue to strengthen core competitiveness. The company has upstream core equipment design capabilities. The company has expanded production capacity in accordance with the latest automation standards, with a full production capacity of less than 300 people. The corresponding per capita output has more than doubled compared to now. The new convertible debt fundraising plant is designed according to this standard. It is expected that production will be put into operation around the end of the year 19. At that time, while revenue increases, labor costs are expected to decrease, and the profitability center is expected to rise. This has been gradually verified in 2019, and there is still room for further improvement in the future. Investment suggestions: The resonance between improved gross margin and demand recovery drives profit to record high. 2020 customer development is expected to usher in a big year of performance. According to the company's performance forecast and growth expectations brought about by customer development, we raised the company's net profit for 2019/20/21 to 3.31/4.37/537 million yuan (the previous forecast was net profit of 3.07/4.18/519 million yuan for 2019/20/21), which is $0.85/1.12/1.38 yuan, the growth rate is 10.7%/32.1%/22.9%. “Buy” rating. Risk warning: Production capacity release progress is low expectations, and high-end market expansion is not expected.