Net profit in 2019 increased by 51.24% year on year in 2019, Wole Home achieved revenue of 1,332 billion yuan, up 23.1% year on year; realized net profit of 154 million yuan, up 51.2% year on year, in line with data disclosed in the previous performance report; net profit after deduction increased 45.4% year on year to 130 million yuan. 19Q1/Q2/Q3/Q4 single-quarter revenue increased 23%/23%/26%/21%, respectively; 19Q1 net profit turned a loss to profit; 19Q2/Q3/Q4 single-quarter net profit increased 89%/12%/59% year on year, respectively. We expect the company's EPS in 2020-2022 to be 0.82, 0.97, and 1.16 yuan respectively, maintaining the “increase in holdings” rating. Direct city expansion, high growth in bulk business revenue In 2019, the company's cabinet business revenue increased 23.5% year on year to 727 million yuan, of which sales volume increased 5.5% year on year and gross margin increased 3.4 pct to 40.8%; whole house customization business achieved revenue of 605 million yuan, up 22.6% year on year, of which sales increased 4.8% year on year, and the gradual increase in capacity utilization led to a sharp increase in gross margin of 10.1 pct to 47.5% year on year. By channel, sales channel revenue increased 8.5% year on year to 929 million yuan; with the addition of direct-run city layout in Shanghai and Wuxi, direct channel revenue increased 20.2% year over year to 157 million yuan; in addition, commodity business revenue increased 170.0% year over year to 241 million yuan. The expansion of direct management led to a significant increase in sales expenses over the same period last year. The increase in the share of bulk business and the weakening of cash flow benefited from the continuous increase in capacity utilization and the implementation of cost reduction and efficiency measures. The gross sales margin increased by 6.4 pct to 43.8% in 2019. The cost rate for the period increased 3.7 pct to 29.6% year on year. Among them, the sales expense ratio increased 5.1 pct to 22.2% year on year, mainly due to the increase in investment in salary expenses, store rent, advertising expenses, etc. due to the expansion of direct sales channels; the management and R&D expenses rate fell 1.5 pct to 7.4% year over year; and the financial expenses rate remained basically the same year over year. The commodity business developed rapidly, and the sales repayment cycle was extended. 19-year notes receivables+accounts receivable increased 152% from the beginning of the period to 297 million yuan. At the same time, due to the rapid development of commodity business and the increase in procurement payments, net operating cash flow in '19 fell 34.6% year on year to 86.142 million yuan. Equity incentives stimulate employees' enthusiasm and demonstrate confidence in medium- to long-term development. The company successively completed the initial grant and reserve of shares in the 2019 equity incentive plan in August 2019 and January 2020. For the initial equity grant incentive portion, the performance assessment target is based on 2018 operating data, with revenue growth of not less than 19%/45%/81% from 2019 to 2021, and net profit growth of not less than 22%/53%/95%; for the reserved share portion granted in 2020, the performance assessment is based on 2019 operating data. Revenue growth from 2020 to 2022 is not less than 22%/53%/92%, and net profit growth is not less than 25%/60%/106%. We believe that this equity incentive is expected to stimulate employee enthusiasm and demonstrate confidence in the company's medium- to long-term development. Whole-house customization continues to advance. Maintaining the “increase in holdings” rating, the rapid development of the company's bulk channel has had remarkable results. The performance exceeded our previous expectations. At the same time, considering the impact of the COVID-19 pandemic on operations, the company's net profit for 2020-2022 is estimated to be 1.85, 2.20, and 262 million yuan (original value of 170 million yuan and 210 million yuan in 2020-2021), corresponding to EPS of 0.82, 0.97, and 1.16 yuan. The average PE value of comparable companies in 2020 was 17 times. Considering that the company's performance growth rate was higher than that of comparable companies, the company was given a target PE of 24 to 25x in 2020, corresponding to the target price of 19.68 to 20.50 yuan, maintaining the “increase in holdings” rating. Risk warning: The development of the epidemic is uncertain, real estate sales have declined sharply, and channel expansion falls short of expectations.