Key investment events: The company released its annual report. In 2019, it achieved revenue of 2,254 billion yuan, up 4.10% year on year; net profit of 338 million yuan, up 13.04% year on year; non-net profit of 284 million yuan, up 7.48% year on year; of these, Q4 single-quarter revenue of 633 million yuan, up 12.91% year on year; net profit of 121 million yuan, up 63.41% year on year; net profit of 107 million yuan, up 84.98% year on year. Gross margin improved dramatically, and Q4 revenue and profit reached record highs in a single quarter: 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, ushered in an inflection point, and reached a record high in revenue in a single quarter. However, for the company, the trend of increasing profit margins is even more noteworthy. Judging from Q4 data for a single quarter, gross margin reached 41.45%, up nearly 9 pct from Q3; net profit margin was 18.92%, up about 5 pct from Q3. Looking at the specific breakdown, on the one hand, there is an increase in the Q4 utilization rate. According to the ratio of capacitor materials/revenue of about 50%, considering that Q4 revenue increased by about 70 million month-on-month, it is estimated that the increase in operating rate will contribute about 4 pct to the increase in gross margin, which means that more importantly, after improving the product structure and increasing the self-sufficiency rate of raw materials, the cost will continue to decline, which in turn will drive continuous improvement in profit margins. Looking to the future, the upward trend in gross margin is expected to continue, and the consumer sector is benefiting from the upward trend of fast charging and continuous breakthroughs in industrial clients. We expect that production in the first quarter will have a slight impact on the first quarter due to the macroeconomic environment, which will have a slight impact on the first quarter. Starting from the second quarter, the upward inflection point is expected to continue. The rapid charging power of mobile phones has accelerated, driving the company's prosperity to continue to rise: 5G phones generally consume more power, consumer demand for charging speed is increasing, and corresponding to the rapid increase in the power of mobile phone chargers. In 2019, flagship models generally used 30-40W fast charging, and in early 2020, 5G flagship models have increased their power to 55W and 65W levels, driving the increase in the specifications and quantity of supporting capacitors. According to disassembly data, the standalone value of a 65W charging head has increased by more than 50% compared to 40W products. At the same time, as a core supplier of capacitors for 3C power supply products in China, the company previously mainly supplied charging head manufacturers. Since 2019, the company's direct supply to major customers has achieved major breakthroughs, and its share has continued to increase, which is the core beneficiary of increased charging power. In addition, the company is also actively expanding markets such as notebook power supplies, which will further open up room for consumer products to grow. Furthermore, in recent years, investment in aluminum electrolysis by the top three Japanese companies has gradually declined, while the demand side has grown steadily. Currently, terminal manufacturers' awareness of import substitution has increased dramatically, providing a favorable industrial environment for leading domestic manufacturers to continue to break through upward. The company's continuous breakthroughs in solid state, MLPC and other fields are expected to drive the company to further exceed expectations. Build a new intelligent chemical factory, and the competitive core continues to strengthen. 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 point 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 drove profit to a record high. Considering the actual industry situation in the first quarter, we lowered the company's 2020/21/22 net profit to 4.06/5.01/606 billion yuan (previous forecast was net profit of 3.31/4.37/537 million yuan in 2019/20/21), EPS was 1.04/1.29/1.55 yuan, and the growth rate was 20.24%/23.52%/20.86%, “buy” rating. Risk warning: Production capacity release progress is low expectations, high-end market expansion is not expected, and mobile phone shipments have declined sharply.