Incident: The company issued a fixed increase plan, with a proposed increase of no more than 1.72 billion yuan for power battery cathode material precursor projects of 480 million yuan, high-conductivity graphite and carbon nanotube production projects of 409 million yuan, cobalt intermediates and cathode copper projects of 315 million yuan, and supplementary working capital of 516 million yuan; performance is pressured by falling cobalt prices, and is expected to usher in a profit inflection point in 2020. The company announced that in 2019, it achieved revenue of 2,999 billion yuan (YOY -15.39%); net profit of 222 million yuan (YOY- 90.00%); quarterly revenue for 2019 Q4 was 557 million yuan, -40.13% year-on-year; and net profit of 38 million yuan, +349% year-on-year. The company's performance declined under pressure in 2019, mainly due to the rapid decline in cobalt product prices. Based on the principle of prudence, inventory impairment was calculated during the reporting period. However, from 2019Q4, the company turned a loss into a profit, ushered in an inflection point in profit. The fixed increase focuses on the new energy materials industry. The company announced that it is proposed to increase no more than 1.72 billion yuan to lay out the new energy materials industry, including: ① power battery cathode material precursor projects (raising 480 million yuan, 30,000 tons/year, 24 months); ② high conductivity graphite and carbon nanotube production projects (raising 409 million yuan, conductive graphite 100 tons/year, carbon nanotubes 150 tons/year, 12 months); ③ cobalt intermediates and cathode copper projects (raising 315 million yuan, 50,000 tons/year of cobalt intermediates, 10,000 tons/year of cathode copper, 24 months); Increase the expansion of “cobalt salt+ternary precursor” production capacity. The company plans to raise 480 million yuan, expand 30,000 tons of ternary cathode precursors, and raise 409 million yuan for cobalt intermediates and cathode copper projects, and plans to achieve 100,000 tons of ternary precursors and 20,000 tons of cobalt salt production capacity over the next three years. By the end of '19, the company had a production capacity of 22,000 tons of ternary precursors, and the production capacity is expected to reach 32,000 tons by the end of 2020; the company has obvious advantages in the field of lithium battery ternary precursors: 1) The company's layout of upstream cobalt salt-precursors. At the technical level, Gana Energy has mature technology and rich experience in hydrometallurgy, ternary precursor synthesis, etc., and has technical and cost advantages. 2) On the customer side: Cobalt salt products support the world's leading cathode materials manufacturer. Domestic customers of ternary precursors are mainly Zhenhua New Materials, etc., and continues to develop domestic and foreign customers. It is expected that with the rapid development of electric vehicles and the trend of high specific energy batteries, demand for ternary precursors will increase, and the company is expected to benefit. Qingdao Haoxin operates steadily, and carbon nanotubes are speeding up the replacement of traditional conductive agents. As a conductive agent for lithium batteries, carbon nanotubes can greatly improve the cycle life of lithium batteries, and the penetration rate of their use is expected to increase dramatically in the future. According to GGII estimates, the penetration rate of carbon nanotube conductive agents used in power lithium batteries is expected to increase from 31.8% in 2018 to 82.2% in 2023. Qingdao Haoxin is a domestic leader in the field of conductive agents for power batteries, has a world-class R&D team, and has excellent downstream customers, including BYD and Guoxuan, and continues to develop leading power batteries at home and abroad. This time, the company plans to raise 315 million yuan to expand production of conductive graphite by 100 tons+carbon nanotubes by 150 tons. In the future, with the release of production capacity, the company's performance will increase. Lay out core materials for fuel cells to create new growth points in the future. The company founded Spruce Hydrogen Energy, focusing on the development of fuel cell products such as membrane electrodes. Dr. Banham is the leader (who has worked for Ballard and is deeply involved in PEMFC R&D) and has a top international technical team (5 foreign experts, all from the world's leading fuel cell companies). Currently, the company is doing preliminary development based on domestic commercial vehicle application scenarios. It is expected that 1 or 2 products will enter the market this year, which is expected to achieve rapid growth next year. Investment suggestions: Through the acquisition of Jiana Energy and Qingdao Haoxin's strong strategy, the company transformed into the field of new energy materials, and deployed in key material fields such as graphene and carbon nanotube conductors (cobalt raw materials, cobalt salts, ternary precursors), graphene, and carbon nanotube conductors. As a high-quality supplier of ternary precursors, Jiana Energy leads the country in conductive agents, and continues to develop leading domestic and foreign lithium battery factories, which will benefit from increased penetration rates of conductive agents. Currently, the company is at the bottom of profit. As the price of cobalt resources stabilizes and production capacity is released, the company's performance is expected to rise steadily. We estimate that the company's net profit for 2020-2021 will be 25/320 million yuan, corresponding to a valuation of 25/20 times, maintaining an increase in holdings rating. Risk warning: Fluctuations in raw material prices, production capacity investment falling short of expectations, risk of impairment of goodwill, sales growth of new energy vehicles falling short of expectations, and increased competitive risk.