The company released its 2019 annual report. Revenue, net profit, and net profit after deduction increased by 7.12%, 13.80%, and 19.86% year-on-year respectively during the reporting period, and the performance was in line with expectations. By the end of 2019, the company had obtained a total of 26 distribution network energy saving projects, with a total contract value of 12 billion yuan. Furthermore, the company recently announced that it intends to acquire the energy-saving assets of the distribution grid of a provincial integrated energy service company under the State Grid. In the April 2016 agreement for the acquisition of State Grid's energy-saving assets, the State Grid Corporation promised not to add energy saving services to distribution networks other than listed companies. This successful acquisition will resolve the issue of competition between companies affiliated with the State Grid and Fuling Electric Power peers. The company is expected to become the only business platform for State Grid power distribution and energy saving. Considering that the company's balance ratio fell to 62% at the end of the year 19, the report is healthy, which can support the rapid growth of the company's energy saving business, maintain the “Highly Recommended Rating-A” rating, and raise the target price to 28-29 yuan. The performance was generally in line with expectations. The company released its 2019 annual report. During the reporting period, revenue, net profit after deduction, and net profit after deduction were 26.22, 3.97, and 392 million yuan respectively, up 7.12%, 13.80%, and 19.86% year-on-year respectively. Among them, revenue for the fourth quarter, net profit after deduction, and net profit after deduction were 660, 0.83, and 80 million yuan respectively, up 3.64%, -40.02%, and -32.85% year-on-year respectively. The decline in the company's performance in the fourth quarter was mainly due to the decline in the average price of electricity sales in the electricity sales business. The gross margin of the electricity sales business fell by 6.09 percentage points in the second half of '19, which affected the company's performance in the second half of the year, especially the fourth quarter. Revenue from the energy saving business has continued to grow rapidly, and profitability has improved. In 2019, the company's energy saving business achieved revenue of 1,252 billion yuan, an increase of 17% over the previous year, gross margin of 36.13%, an increase of 3.37 percentage points over the previous year. The energy saving business revenue continued to grow rapidly, and profitability also improved. Out of the company's total of 26 distribution grid energy saving projects from 2016 to 2018, 21 projects have been completed and put into operation. Among them, two new energy saving projects in Hunan and Hubei were added to the second half of 2019 and put into operation. In addition, construction of the Zhejiang Phase II and Xinjiang Phase II projects began in the second half of '19. It is proposed to acquire the energy-saving assets of State Grid power distribution and upgrade from the only listed platform to the only business platform. The company announced on April 3 that it intends to issue non-public shares to no more than 35 specific investors to raise capital for the acquisition of energy-saving assets of the distribution grid of integrated energy service companies under the State Grid and supplementary working capital. In the April 2016 agreement for the acquisition of State Grid's energy-saving assets, the State Grid Corporation promised not to add energy saving services to distribution networks other than listed companies. A successful acquisition of this kind will resolve the issue of competition between companies affiliated with the State Grid and Fuling Electric Power industry. The company is currently the only listing platform for energy-saving power distribution operations on the State Grid, and is hopeful that it will become the only business platform in the future. Investment advice: Maintain the “Highly Recommended - A” rating and raise the target price to 28-29 yuan. Risk warning: The return on the asset-heavy model is lower than expected; competition among peers has not been resolved.