Key investment points: Second successful business, becoming a leader in intelligent equipment. The company's traditional business is dedicated printing and scanning products, and it is the leading manufacturer of special printing and scanning equipment in China. In 2015, the company started a second venture, focusing on logistics, finance, and new retail industries, and launched products such as smart express lockers, smart teller machines, and smart mini supermarkets. Currently, the company's annual production capacity of intelligent self-service equipment has reached 250,000 units. Driven by a second venture, the company's operating conditions have improved rapidly. The company's overall performance has continued to grow steadily in recent years. In 2018, the company's revenue level reached 2.64 billion yuan, an increase of 41.6% over the previous year, and achieved net profit of 380 million yuan, an increase of 32.8% over the previous year. The company's performance declined in 2019, mainly due to order adjustments for some major customers in the new retail industry and logistics industry. At present, emerging business has become the company's pillar business. In 2019, the company's strategic emerging industries (finance, logistics, new retail) revenue accounted for 74.70% of total revenue. Special printing and scanning equipment has a leading edge and has mastered key component technology. Thermal print heads (TPH) and contact image sensors (CIS) are key components of special printing and scanning equipment. The company's TPH and CIS are independently developed and sold through subsidiaries Shandong Valin Electronics (26.8%) and Weihai Valin Optoelectronics (51%), respectively. Shandong Valin Electronics is the only enterprise with TPH's core design, R&D and mass production capabilities in China. Currently, TPH has a production capacity of 20 million units/year, ranking first in the Chinese market and third in the world. According to the company announcement, Shandong Hualing Electronics has submitted IPO counseling and filing materials for the Science and Technology Innovation Board and is accepting listing guidance. Weihai Valin Optoelectronics has an outstanding competitive advantage in the CIS market segment. It has high-speed color CIS design and production technology and the largest CIS large-scale production capacity in China. It has strong market competitiveness in the CIS high-end market, especially in the global financial sector. The annual production capacity of contact image sensors (CIS) is 5 million, and the global market share is 7%. Smart devices open up room for company growth. 1) Financial industry: Bank outlets have been intelligently upgraded, and bank self-service devices have begun to be widely deployed. By the end of 2018, banks across the country had deployed a total of 1.03 million self-service devices, including 20,000 innovative self-service devices. The number of self-service device transactions reached 40 billion, with a total transaction volume of 66 trillion yuan. New Beiyang has mature intelligent network transformation products and solutions, and the core cash processing module has a leading edge; 2) Logistics industry: As of 2019, the number of express delivery cabinets nationwide had exceeded 320,000, and the national express entry rate had reached 9.4%. Fengchao Express's easy oligopoly dominates the smart courier cabinet operating market, and it is expected that delivery cabinet deployment will accelerate in 2020. The overall layout of the logistics industry in New Beiyang will benefit from the accelerated deployment of express delivery cabinets and the increase in the penetration rate of automatic sorting systems; 3) Retail industry: The per capita ownership rate of vending machines in China is low, and there is still a lot of room for growth in quantity. The multi-product layout of New Beiyang focuses on intelligent micro-super multi-scenario delivery, and empowers the operation of self-service vending machines through a platform for everyone. In December 2019, the company issued convertible bonds to raise capital, increase smart retail, and increase the annual production capacity of smart devices to 350,000 units. Profit forecast and investment rating: Give an “increase in holdings” rating. We believe that the company's traditional professional printing and scanning equipment has a leading edge, has successfully started a second business, and that intelligent equipment in the financial, logistics and retail industries is driving the company's rapid growth. Considering the negative impact of the epidemic at home and abroad on the company's business, we expect the company's EPS in 2020-2022 to be 0.49/0.65/0.82 yuan, respectively, and 21/16/13 corresponding to the current stock price PE, respectively, covering the “increased holdings” rating for the first time. Risk warning: 1) Bank smart equipment procurement falls short of expectations; 2) The pace of procurement by logistics and retail customers falls short of expectations; 3) the risk that the overseas epidemic will continue to worsen; 4) project construction progress falls short of expectations; 5) company performance falls short of expectations; 6) systemic risks.