Incident: The company announced a preliminary increase in 2019 results. In 2019, it achieved net profit attributable to mother of 227 million yuan to 280 million yuan, an increase of 83%-126% over the previous year; net profit after deducting non-return to mother was 214-267 million yuan, an increase of 91% to 138% year on year. Among them, net profit for the fourth quarter was 0.63 to 116 million yuan, an increase of 25%-129% over the previous year. Benefiting from the vigorous promotion of ETC, performance has grown rapidly. According to the median forecast calculation, net profit returned to the mother in 2019 was 253 million yuan, up 104% year on year. Q4 was 89 million, up 77% year on year. Performance growth was rapid, mainly due to the Ministry of Transport's vigorous promotion and popularization of ETC construction. As of December 18, the total number of ETC users nationwide reached 192 million, an increase of 111 million, driving the company's ETC RF chip shipments to a significant increase. On a month-on-month basis, profit declined slightly in a single quarter. We judge that it was mainly due to higher year-end cost accruals and an increase in upstream Fab and test costs. In addition to ETC, sales of the company's other product lines have also increased. Benefiting from the explosion of the TWS headphone market and cooperation with downstream home appliance and IoT solution manufacturers, Bluetooth and WiFi chip shipments all increased compared to the same period last year. The field of smart transportation continues to be deeply cultivated, and the Internet of Things opens up room for growth. As of June 2019, the country had 340 million motor vehicles and 250 million cars. There is still room for improvement in ETC penetration, and demand in the front-end market will also drive the upgrading of product specifications. At the same time, the company relies on ETC chips to expand development in application fields such as path recognition, anti-congestion, and parking lot management, and is expected to achieve further breakthroughs in the field of smart transportation. In addition, the company is deeply involved in the field of wireless communication and has a rich product line. It has strong competitiveness in low-power circuit design. The TWS chip solution has low power consumption, voice control, and noise reduction functions. WiFi+Bluetooth integrated modules are gradually penetrating into smart homes, and there is plenty of room for future growth. Considering the impact of high expenses at the end of the year and tight upstream production capacity on the company's profit margin, the company's net profit for 19-21 was reduced to 2.61, 3.39, and 441 million yuan. Corresponding to the current stock price (closing price on January 22, 2020), PE was 56.2 times, 43.3 times, and 33.3 times, maintaining the “prudent increase” rating! Risk warning: ETC promotion fell short of expectations; wearable device boom declined; Bluetooth product prices fell sharply. Risk warning: ETC promotion fell short of expectations; wearable device boom declined; Bluetooth product prices fell sharply.