The company released the 2019 performance report. The total revenue for 2019 was 2.102 billion yuan, up 19.37% year on year, and net profit was 159 million yuan, up 94.60% year on year, close to the upper limit of the performance forecast guidelines. Basic earnings per share were 0.42 yuan, up 100% year over year. The main reasons for the sharp increase in performance are: product structure optimization, HDI share continues to increase, related new products have been shipped in batches, and overall profitability has been further improved; flexible circuit boards (FPC/FPCA) have grown steadily, and the collaborative benefits of rigid circuit boards and flexible circuit boards have gradually become apparent; in addition, the disposal of shares in Zhongsheng Technology has obtained investment income. Comment: The main products of PCB manufacturers with a complete product line are double panels, multi-layer boards, high-density interconnect boards, flexible circuit boards, rigid and flexible circuit board components. According to the 19-year semi-annual report, rigid circuit boards account for 68.36% of revenue, of which HDI accounts for about 35%, flexible circuit boards account for 14.03%, flexible circuit board components account for 16.34%, and others account for 1.27%. Listed companies have formed a full range of PCB product portfolios covering rigid circuit boards (multi-layer boards and HDI as the core) and flexible circuit boards (single and double panels, multi-layer boards, rigid-flex boards) to provide customers with comprehensive PCB product integration services. Growth has continued to be high in the past, and there is plenty of room for improvement in gross margin. Total operating income in 2019 was 2.102 billion yuan, up 19.37% year on year, and net profit was 159 million yuan, up 94.60% year on year. Beginning in 2015, the company achieved a major breakthrough in order volume in terms of multi-layer boards. Total operating revenue increased from 579 million yuan in 2015 to 2.102 billion yuan in 2019, with an average compound annual growth rate of 38.03%. Net profit of Huimu increased from 0.3 billion yuan in 2015 to 159 million yuan in 2019, with a compound growth rate of 51.7%. At the same time, gross margin also increased from 16.34% in 2015 to 23.02% in Q3 2019. It is mainly due to the increase in the gross margin of multi-layer boards, the full achievement of HDI production, and the company's optimization of product structure, which has increased the shipment of products with high gross margin in rigid, flexible, and rigid-flexible composite boards. With the rapid increase in revenue, the company has maintained a steady level of sales expenses, management expenses, and R&D expenses through good system management. There is plenty of room for improvement in the company's gross margin compared to its peers. The HDI layout is early, and the industry is in short supply. The company is one of the first PCB companies to start HDI production. Since 2011, HDI has been listed as the core of the company's business, invested in HDI in 2012, and invested in HDI with a production capacity of 360,000 square meters/year in 2014. Production was reached in the second half of '17. Currently, the company's HDI products account for about 35% of the total amount of rigid circuit boards. We believe that demand for HDI will continue to expand. At the same time, the HDI supply and demand pattern is tight due to limited capacity expansion. HDI is more widely used in smartphones. Smartphone terminals are the most important application area for HDI. Driven by 5G, the number of components in mobile phones has increased dramatically, leading to an increase in HDI usage. In addition, benefiting from 5G, some other electronics fields will also adopt HDI. Since the commencement of HDI production has strict requirements for capital, environmental protection, and water emissions, and some **** manufacturers have transferred part of their production capacity to ANY-Layer, we further believe that HDI will be in short supply for some time to come. The acquisition of Yuansheng increased soft board production capacity and invested in the construction of the Zhuhai Fushan Project to expand production capacity. The company exploited its own production capacity potential through production line transformation. Endogenous growth went hand in hand with external mergers and acquisitions to expand the company's production capacity scale. Yuansheng Electronics is mainly engaged in R&D, production and sales of flexible printed circuit boards (FPCs) and their components (FPCA). The current annual production capacity is 200,000 square meters of single panels, 210,000 square meters of double panels, 20,000 square meters of multi-layer and rigid-flex panels (equivalent to an annual production capacity of about 713,000 square meters for single panels). The Fushan project plant in Zhuhai is currently undergoing rapid infrastructure construction and is progressing smoothly. The first phase is expected to invest 15-1.6 billion dollars and be completed and put into operation in 2021. According to industry rules, the input-output ratio is approximately 1:1.4 billion, and the output value of the Zhuhai plant is about 2.1 billion to 2.24 billion yuan. The supercompany's current production capacity is more than 1 times that of the company. First coverage, the “buy” rating was given taking into account Yuansheng Electronics' merger factors. We expect the company's operating income from 2019 to 2021 to be 2.05 billion yuan, 2,582 billion yuan, and 32.28 billion yuan, respectively, up 19.55%, 22.64%, and 25.00% from the previous year; net profit was 157 million yuan, 218 million yuan, and 287 million yuan, respectively, up 93.0%, 38.4%, and 32.06% from the previous year. The share capital of the merger and acquisition of Yuansheng Production Capacity increased. The EPS from 2019 to 2021 is expected to be 0.40 yuan/share, 0.55 yuan/share, and 0.73 yuan/share, respectively, and the corresponding PE is 40x/29x/22x, respectively. Tight supply and demand in the HDI industry is conducive to the company's product restructuring. We are optimistic about the increase in gross margin brought about by the improvement in the company's operating capacity; at the same time, with the gradual implementation of the Fushan project in Zhuhai, the company's production capacity will increase dramatically, so we are optimistic about the company's rapid growth in the future. First coverage, giving a “buy” rating. Risks suggest that the start of production at the Zhuhai plant falls short of expectations; HDI demand falls short of expectations; and competition in the PCB industry is intensifying.