Incident Company announced its 2019 annual report, achieving a year-on-year increase of 19.09% in revenue of 286 million yuan and a 6.67% year-on-year increase in net profit of 79 million yuan. (1) High R&D investment and tariffs affect the company's short-term net profit. The company's net profit growth rate in 2019 was lower than the revenue growth rate. The main reason is: on the one hand, the company's overall gross profit margin in 2019 was 69.58%, down 2.46pct from 2018, mainly due to a year-on-year increase of 839,000 US dollars in tariffs; on the other hand, in 2019, the company's R&D expenses were 33 million yuan, up 41.05% year on year, and R&D revenue reached 11.66%, up 1.81pct from 2018. It is expected that the company's R&D expenses will maintain a steady growth rate, and the impact of tariffs will be gradually eliminated through price increases and other measures. It is expected that the growth rate of net profit from now on will remain in sync with the growth rate of revenue. (2) New temperature detection equipment is growing rapidly, and the growth logic is constantly being verified. Due to the high degree of similarity in technical principles and high degree of customer coincidence of testing equipment for different physical signals, testing equipment companies have natural technological and market advantages in their rich product categories. This kind of technical reusability and customer reusability is also an important foundation for the growth of testing equipment companies. The company's pressure testing equipment has reached world-class standards. 90% of the company's export products are sold to industrially developed regions such as the US, Europe, and Japan, and some highly competitive main products are 10% higher than international competitors. After that, the company began to increase the R&D and promotion of temperature testing equipment. In 2019, the company's temperature testing equipment achieved revenue of 838.5 million yuan, an increase of 39.3% over the previous year, achieving rapid development. At the same time, in terms of technical indicators, temperature testing equipment has reached world-class standards. We believe: First, the company's success in pressure testing equipment shows that the company has Core competitiveness; second, the company's successful breakthrough in temperature testing equipment has verified the advantages of testing equipment companies in expanding various categories of natural products. After the temperature testing equipment, the company is still actively deploying other types of testing equipment. After the company's fund-raising projects reach production and the production capacity problem is solved, the range of testing equipment will continue to be enriched, and at the same time, it will promote an increase in the market share of testing equipment. The company has more definite growth and more room for growth. (3) The company has entered a stage of rapid development. ① A twin-engine development will be built in the near future. In 2019, the company's pressure testing equipment accounted for 85.26% of revenue, and temperature testing equipment accounted for 13.45% of revenue. Within the next three years, it will form a dual-engine main business platform for pressure testing products and temperature testing products. ② The new products in reserve will continue to open up new growth space for the company. After the introduction of temperature testing equipment, the company's research and development and upgrading of temperature and humidity testing equipment progressed smoothly, electrical testing equipment was actively developed, and pressure transmitters were also progressing smoothly (the testing equipment is a standard device, the pressure transmitter is a pressure measuring instrument, and its market space is larger). ③ Launch a SaaS software platform with unique advantages and enter the field of industrial Internet. The industrial Internet is the key development direction of China's next stage, and it is also an inevitable trend in industrial development. Currently, among industrial production equipment such as high-end machine tools, robots, instruments, etc., mostly foreign brands are the main ones. The low degree of nationalization of high-end industrial production equipment is one of the obstacles to the development of the industrial Internet in China. We believe that in high-end industrial production equipment, testing equipment (a type of instrument) segment, China already has world-class enterprises with core technology represented by Const. It is a competitive segment in China's manufacturing industry. At the same time, testing equipment collection and Accumulating a large amount of industrial data is also a must-compete place and an important breakthrough in the industrial Internet. Therefore, we believe that the company, as a leader in domestic testing equipment, has world-class standards, and has unique advantages in entering the field of industrial connectivity. It is expected that the company's latest SaaS software platform will be officially launched in 2021. (4) With the technical advantages of MEMS sensors, new growth points can be expected. The industrial MEMS sensor industry chain is divided into three technical links: design, manufacturing, packaging, and inspection: first, sensor core design and manufacture, second, sensor packaging, and finally sensor evaluation and compensation algorithms. The company currently has world-class standards in the field of sensor inspection. The company can provide comprehensive inspection and analysis for sensors through unique technology, providing an important basis for the improvement of design and manufacturing packaging processes. In the manufacturing and packaging stage, Const is speeding up the verification of process parameters and equipment development of sensor packaging test lines; at the same time, it is expanding cooperation with scientific research institutions with silicon pressure sensor design capabilities to accelerate the implementation of MEMS sensor core design and production. (5) Investment suggestions: The company's revenue for 2020-2022 is expected to be 330.89, 412.90, and 508.64 million yuan, up 15.53%, 24.78%, 23.19% year on year, and net profit of 94.15, 120.81, and 150.74 million yuan in 2020-2022, up 19.26%, 28.32%, 24.77% year on year, corresponding to PE 25.06, 19.53, and 15.65 times, maintaining the “buy” rating.