The company released its 2020 quarterly report, with steady revenue growth. The company released its 2020 quarterly report. 2020Q1 achieved revenue of 2,837 billion yuan in a single quarter, an increase of 9.67% over the previous year, net profit of 113 million yuan, a year-on-year decrease of 4.28%, and net profit of 112 million yuan, a year-on-year increase of 0.94%. The gross profit margin was 10.01%, down 3.3 percentage points from the previous year. The pandemic has affected the company's overall gross profit margin, but the company continues to strengthen cost control. The outbreak of the novel coronavirus pneumonia epidemic in the first quarter of 2020 affected the resumption of work and production and the recovery of prosperity in the upstream and downstream electronics industry chain to a certain extent, but the company still relied on its core competitive advantage to achieve steady revenue growth. The slight decline in net profit was mainly due to the decline in gross margin due to the impact of the pandemic, partial rent relief, exchange losses due to exchange rate fluctuations, and special donations for the pandemic. In terms of expenses, the company's 2020Q1 sales+management+R&D expenses fell 8.68% year on year, of which sales expenses fell 12.74% year on year. Increased cost control led to a marked decrease in the company's expense ratio. Looking forward to the future, the growth trend of leading distribution companies remains unchanged, and we are optimistic that the company will grow in the long term with its core competitive advantages. On the one hand, domestic distributors benefit from the growth opportunities of the overall electronics industry brought about by downstream demand, and on the other hand, embrace the domestic substitution wave driven by strong domestic demand. Judging from the competitive pattern, mergers, acquisitions and restructuring to promote the integration and concentration of the distribution industry will be the general trend. Among them, leading manufacturers will be the strongest, while Shenzhen Huaqiang has excellent core competitiveness in terms of resources, technology, scale, management, model, and location. The acquired subsidiaries are of excellent quality, and are expected to stand out and continue to grow in the fiercely competitive electronic components distribution industry. Earnings forecasts and ratings. We are optimistic that the company will embrace future opportunities as a distribution leader and achieve the growth vision of the strong. We expect the company's EPS in 20-22 to be 0.71/0.83/0.98 yuan, respectively, and the corresponding PE will be 17.32/14.78/12.40 times. Referring to comparable company valuations, a PE valuation corresponding to 20-year performance of 25 times, corresponding to a reasonable value of 17.6 yuan/share, was given a “buy” rating. Risk warning. The declining cycle and growth of the electronics industry fell short of expectations; the progress of 5G progress fell short of expectations; the development of emerging fields such as automotive electronics fell short of expectations; and industry competition increased risks.