Guide to this report: The energy saving business grew steadily, but the company's performance growth rate slowed in 2019 due to a decrease in the gross margin of electricity sales. The company plans to acquire additional energy-saving assets for distribution grids of provincial companies under the State Grid, and expects the acquisition of assets to increase the company's performance. Investment points: Investment recommendations: The energy saving business grew steadily in 2019, and the gross margin increased further, but due to the decline in the gross margin of the electricity sales business, the company's performance growth rate slowed down. Since the company did not sign a new contract in 2019, it was lowered from 2020 to 2021, and the 2022 EPS was added to 1.41, 1.57, and 1.57 yuan (before adjustment, the 2020/2021 EPS forecast was 1.54/1.61 yuan, respectively). Considering the monopoly nature of the distribution grid energy saving business, it gave 2020 18 times PE, which is slightly higher than the industry average, with a target price of 25.47 yuan to maintain “increased holdings”. Incidents: The company announced its 2019 annual report. 2019 operating income was 2,622 billion yuan, up 7.12% year on year; net profit from the mother was 397 million yuan, up 13.80% year on year; net profit after deducting non-return mother was 392 million yuan, up 19.86% year on year. The performance was in line with expectations. Distribution grid energy efficiency grew steadily, electricity sales profit declined, and 2019 performance increased 14% year over year. The company's 2019 revenue was 2,622 billion yuan, of which power grid energy saving business revenue was 1,252 billion yuan, up 17% year on year, gross profit margin 36.13%, up 3.4 percentage points year on year; power sales revenue was 1.37 billion yuan, down 0.05% year on year, but due to falling electricity sales prices, electricity sales business gross profit margin was 5.67%, down 3.3 percentage points year on year. Affected by the two businesses, the company's net profit in 2019 was 397 million yuan, an increase of 13.8% over the previous year. The energy efficiency business is expected to grow further in 2020. The company spent 819 million yuan in capital expenditure on energy saving business in 2020, and plans to achieve annual energy saving business revenue of 1.4 billion yuan. The company's energy saving business will continue to grow steadily. Plan a non-public stock offering, acquire the energy-saving assets of the distribution grid of a comprehensive energy service company under the State Grid Corporation, and supplement working capital. According to the company's announcement on April 4, in order to resolve competition issues in the industry while optimizing the capital structure and improving the financial situation, the company plans to issue non-public shares to no more than 35 specific investors to raise capital to acquire the energy-saving assets of the distribution grid of the provincial integrated energy service company under the State Grid Corporation and supplement working capital, etc., to continue to expand and strengthen the energy saving business of the distribution grid. Risk factors: energy saving projects do not advance as expected, electricity demand falls short of expectations