Core opinion: In 2019, revenue grew steadily, and the profit side declined. The company released its 2019 annual report. For the full year of 2019, the company achieved revenue of 14.355 billion yuan, a year-on-year increase of 21.66%, net profit of 630 million yuan, a year-on-year decrease of 8.10%, of which the 2019Q4 single quarter achieved revenue of 4.425 billion yuan, a year-on-year increase of 30.51%, and net profit of 142 million yuan, a year-on-year decrease of 15.55%. In terms of gross margin, the company achieved an overall gross profit margin of 11.16% in 2019, a year-on-year decline of 4.59 percentage points. Among them, the 2019Q4 single quarter achieved gross profit margin At 10.2%, it was basically the same month on month. With its core competitiveness, the company achieved continuous and steady growth even when the industry was not booming. In 2019, the domestic economy showed a downward trend and the poor prosperity of the electronics industry put some pressure on the performance growth rate of electronic component distribution companies. However, thanks to the domestic substitution wave and the company's share replacement with some small to medium distributors, the company's revenue continued to grow steadily. However, the reason for the decline in the company's profit side is due to the combined effects of medium- to short-term disruptive factors such as customer inventory removal, careful procurement, and the mobile phone industry's 4G to 5G waiting period, which led to a decline in the share of high-margin products distributed by the company. At the same time, the prices of some products (such as MLCC) declined to a certain extent in '19 compared to '18. The company continues to strengthen cost control and improve the quality of operations. The company's sales+management+R&D expenses for the full year of 2019 fell 19.76% year on year, of which sales expenses fell 29.49% year on year. Increased cost control led to a marked decrease in the company's expense ratio. At the same time, if the impact of investment income categories on net profit is excluded, the company's net profit (excluding investment income) in the 2019Q4 single quarter was 142 million yuan, an increase of 2.16% over the previous year. The Q4 growth rate changed from negative to positive compared to the previous three quarters. In addition, the company's net operating cycle was shortened month-on-month, and the cash flow from operating activities improved year-on-year. Earnings forecasts and ratings. We are optimistic that the company will embrace future opportunities as a distribution leader and achieve the growth vision of the strong. We expect the company's EPS in 20-22 to be 0.71/0.83/0.98 yuan, respectively, and the corresponding PE will be 17.20/14.68/12.32 times. Referring to comparable company valuations, a PE valuation corresponding to 20-year performance of 25 times, corresponding to a reasonable value of 17.6 yuan/share, was given a “buy” rating. Risk warning. The declining cycle and growth of the electronics industry fell short of expectations; the progress of 5G progress fell short of expectations; the development of emerging fields such as automotive electronics fell short of expectations; and industry competition increased risks.