Incident: On April 22, 2020, the company released its 2019 annual results report, achieving annual revenue of 712 million yuan (+35.21%); net profit to mother of 94 million yuan (+33.41%), after deducting net profit of 93 million yuan (+48.52%). At the same time, the company released its 2020 quarterly report. 2020Q1 achieved revenue of 217 million yuan (+64.38%) and net profit of 30 million yuan (+26.54%) to mother. Reviews: 1. The company's business is mainly domestic, and the impact of the epidemic was relatively limited. The first quarter's performance was excellent: the company achieved revenue of 187 million yuan in the fourth quarter of 2019, up 23.21% year on year, down -12.13% month on month; achieved net profit of 14 million yuan, down -40.83% year on year, down -54.18% month on month. For the full year of 2019, we achieved revenue of 712 million yuan, up 35.21% year on year; net profit to mother was 94 million yuan, up +33.41% year on year; net profit after deducting non-return to mother was 93 million yuan, up 48.52% year on year. The company insists on new smart city scenarios and cultural lighting as its main business. According to the established development strategy, the company has formed a comprehensive multi-dimensional full-industry chain service chain system from program creation, technical support, product R&D and manufacturing, engineering project installation, street light management and maintenance, and the high quality of smart city construction and operation by adopting active sales strategies, exchanges and cooperation with universities to develop new products, lighting engineering and smart street lights, etc., and has strong technology and core competitiveness in the industry. The domestic business scenario is limited, and the impact of the epidemic was limited. The increase in revenue from the Greenway System Integration Project led to rapid overall revenue growth. 2020Q1 achieved revenue of 217 million yuan, an increase of +64.38% year on year; net profit to mother was 0.3 billion yuan, up +26.54% year on year. The first quarter performance was excellent. The company's overall gross margin increased by nearly 1% to 36.44% in 2019, with product R&D and manufacturing gross margin rising nearly 2% to 36.17%. In the first quarter of 2020, due to the low gross margin of the Greenway System Integration Project, changes in revenue recognition standards and the impact of the pandemic, the company's gross margin fell to 26.94%. As a result, the profit growth rate was lower than the revenue growth rate, and it is expected to gradually pick up thereafter. 2. In the context of the launch of the “new infrastructure” project, the industry has entered a period of rapid growth, and the trend of increasing value and operation has opened up room for long-term growth: the company gives full play to its advantages in the entire lighting industry chain, takes advantage of the strong development needs of the communications industry, uses light poles to supplement 5G group website resources and become an important carrier for smart cities, and actively lays out smart street lighting projects. In the context of the launch of “new infrastructure” projects, the industry has entered a period of rapid growth. Due to the increasing complexity of smart street lighting systems and the government and related institutions preferring to buy services, project operation outsourcing is expected to become the mainstream business model. Through a model of construction plus later operation, the company has gradually established a model of gradually upgrading from single product sales to product sales plus smart city operation and service. A large amount of capital is required in the early stages of the operation project, but the cash flow is relatively stable in the later stages. The company successfully issued 208 million yuan of convertible bonds in 2020. This move will help enhance the company's capital strength, help accelerate project implementation and exploration and practice of operation management; at the same time, meet the company's financial needs for continuous and rapid development, improve the company's ability to undertake major projects, and enhance the company's future profitability. 3. With “light pole+operation” two-wheel drive, the company's performance is expected to continue to grow rapidly: the company's business covers all aspects of the industry chain such as design, street lights, light poles, and integration. As of December 31, 2019, the company has obtained a total of 433 patents, including 8 invention patents and 75 utility model patents. It is the only domestic listed company with a full industry chain layout and focuses on the field of lighting. The company has now cooperated with a series of equipment, integration and cloud service industry vendors such as Tower, Huawei, and Tencent, which can effectively enhance the company's comprehensive system solution capabilities and continue to help the development of the smart street light industry. The company is expected to share the dividends of the rapid development of the industry with the giants. In view of the company's unique competitive advantage, we are optimistic that its performance will be further improved under the “smart street light+project operation” development path. 4. Profit forecast and investment suggestions: We expect the company to achieve revenue of 1,106/16.41/2110 billion yuan from 2020 to 2022, net profit to mother of 1.64/2.37/292 million yuan, eps 1.60/2.32/2.87 yuan, corresponding PE 29/20/16 times. Considering that under the influence of the epidemic in the first quarter, the company's performance was still growing rapidly. Driven by demand for new infrastructure and 5G small and micro station sites, the company may enter a period of large-scale expansion of performance and maintain the company's “Highly Recommended” rating. 5. Risk warning: the impact of the epidemic; the progress of smart street lighting projects falling short of expectations; the increase in the company's market share falls short of expectations; and the decline in gross margin.