The company's performance is in line with expectations, and operating cash flow has improved dramatically: the company is mainly engaged in R&D, production and sales of automated module assembly equipment for flat panel displays. The company's equipment products have a high technical content and a high degree of automation. They are mainly used in the module assembly process of the rear end of the flat panel display panel, that is, the module assembly and production process of TDT-LCD, OLED display modules, touch screens and other related components. The company published its 2019 annual report and 2020 quarterly report. In 2019, the company achieved operating income of 689 million yuan, up 3.77% year on year, mainly due to increased demand for flat panel display production equipment in downstream industries and an increase in company orders; net profit attributable to shareholders of listed companies was 81 million yuan, down 5.17% year on year, mainly due to reduced gross margin and increased R&D investment due to increased industry competition, and the company accrued 9.2431 million yuan impairment preparations for possible impairment losses, leading to a decrease in net profit; net operating cash flow was 68 million yuan, up 163.83% year on year, mainly Due to an increase in the company's sales payback and a decrease in supplier payments; the company's net investment cash flow was $8.714 billion, an increase of 87.14% over the previous year, mainly due to the company's purchase of land use rights and a decrease in ongoing construction projects; net fund-raising cash flow was 164 million yuan, an increase of 1479.88% over the previous year, mainly due to the company's issuance of 200 million yuan of convertible bonds. The company's annual expenses were 88,1389 million yuan, management expenses increased 2.38% year on year, sales expenses decreased 10.69% year on year, R&D expenses were 66.915,500 yuan, up 17.35% year on year, R&D expenses were 9.72%, and R&D investment increased year by year; the company's gross sales margin was 34.37%, up 0.13 pct from 2018, and gross margin by product remained stable; net sales margin was 11.74%, down 1.11 pct from last year. The company achieved operating income of 164 million yuan in the first quarter of 2020, a year-on-year decrease of 10.12%, net profit of 21.905 million yuan, a year-on-year increase of 35.69%, and good operating conditions; net operating cash flow was -0.17 million yuan, an increase of 42.41% over the fourth quarter of last year; the company's expenses for the first quarter were 15.83 million yuan, of which management expenses fell 12.17% year on year; the company's gross sales margin was 28.54%, down 3.43 pct year on year. Net sales interest rate was 13.38%, up 3.4 percent year on year PCT. Considering the impact of the COVID-19 pandemic in the first quarter, the company's performance was in line with expectations. OLED is speeding up the replacement of LCD, and the company is actively deploying the OLED back-end module equipment sector: due to weak LCD demand, Samsung plans to discontinue all LCD production and transition to OLED by the end of 2020, indicating that in the future, LCD will gradually withdraw from the historical stage, and OLED will become mainstream display technology. OLED production is developing rapidly. The global OLED production value in 2018 was US$25.5 billion, and is expected to reach US$50 billion in 2020, with an average compound annual growth rate of 40.0%. China's OLED production value grew rapidly, from US$2.49 billion to US$13.11 billion, with an average compound annual growth rate of 51.48%. It is expected to reach US$16.28 billion in 2019, an increase of 24.18% over the previous year. The smartphone OLED panel market space will reach US$34.65 billion in 2021. Although the OLED panel market space in 2022 may be lower than in 2021 due to lower panel prices, it is still expected to reach US$33.38 billion. Currently, domestic OLED investment is gradually shifting from the panel segment to the MDL module segment, which is expected to rapidly increase the demand for post-stage module equipment. According to estimates, the future demand for OLED post-stage module processing production lines in mainland China is about 240. According to the construction investment of 150 million yuan per section, the market space will be around 36 billion yuan. The company currently has OLED Pol Lami lamination equipment, OLED 3D curved lami lamination equipment, OLED CO F FOF binding equipment, and OLED pad bending equipment, and all of them have been mass-produced. The company used its self-developed FOG bonding machine based on TFT technology in the LCD field to enter the high-end product field and successfully connect with high-quality customers such as Shentianma and BOE. The total number of orders signed between the company and BOE in 2019 was 335 million yuan. On March 23, 2020, the company announced that it once again won the bid for Chengdu BOE OLED, with an amount of 100 million yuan including tax. The target targets were 3D laminating equipment and polarizer mounters. The winning bid fully demonstrated the competitive advantage of the company's OLED equipment and is in an absolute leading position among domestic manufacturers. As equipment import substitution accelerates, the company opens up room for further growth. The automotive electronic equipment business achieved a breakthrough and actively deployed the semiconductor equipment business: At the beginning of the year, the company announced that it had obtained the supplier qualification of the German Continental Group, one of the world's top 500 and one of the world's leading suppliers of automotive ancillary products, and was officially integrated into the supply chain system of the German Continental Group, indicating that the company had made a breakthrough in the production of module equipment for automotive screens. In 2019, the company and Continental Group signed a total of 74.6958 million yuan of sales orders, all of which are production lines for high-end models. The company has entered a new field of automotive electronics applications with broad market space, which will help to further expand the scope and fields of application of the company's product line and create new performance growth points for the future. At the same time, the company is actively developing the semiconductor packaging equipment field. According to SEMI statistics, the revenue of global semiconductor equipment manufacturers reached 59.8 billion US dollars in 2019. The shipment value of North American semiconductor equipment manufacturers in February this year was 2.37 billion US dollars, a slight increase of 1.2% from the 2.34 billion US dollars in January, and a 26.2% increase from 1.88 billion US dollars in the same period last year. SEMI expects the semiconductor equipment market sales volume to be US$60.8 billion and US$66.8 billion in 2020 and 2021, respectively. As 5G and intelligent applications drive demand for semiconductor products, the scale of semiconductor equipment sales is expected to continue to grow. The current R&D results of Liande J·R&D Co., Ltd., a wholly owned subsidiary of the company in Japan, include semiconductor flipping equipment and SFO optical system inspection equipment. At present, the product has completed prototype debugging, and the precision of the equipment has reached mass production standards and has been verified by downstream customers. Investment advice: The company's performance is in line with expectations, import substitution is expected to accelerate, and the new business layout is growing rapidly. We expect the company's corresponding EPS in 2020-2022 to be 1.01, 1.42, and 1.87 yuan, respectively, and PE of 28.17 X, 20.03 X, and 15.13X respectively, maintaining the “highly recommended” rating. Risk warning: Competition in the industry has intensified, product development progress has fallen short of expectations, and order conditions have fallen short of expectations.