Events: According to the company's quarterly report, in the first quarter of 2020, the company achieved operating income of 61 million yuan, a year-on-year decrease of 0.35%; net profit of 110 million yuan, a year-on-year increase of 9.8%; and basic earnings per share of 0.34 yuan. The performance was in line with expectations. The impact of the epidemic on the company's main business is limited, and projects under construction are yet to be put into operation: As a listing platform under the State Grid, the company's main business mainly includes two parts: power supply and distribution grid energy saving. The epidemic has had no impact on the company's existing distribution grid energy saving projects, and there has been a slight impact on the electricity sales business. Since the gross margin of the company's electricity sales business is far lower than that of the energy saving business of the distribution grid, and the share of revenue tends to decline, the impact of the current epidemic on the company as a whole is quite limited. According to the annual report, as of the end of last year, the amount of projects under construction by the company was 160 million yuan, of which 140 million yuan was for infrastructure projects. The implementation progress of the Henan power grid energy-saving transformation phase II project and the Xinjiang distribution grid energy-saving transformation phase II project was 9% and 33%, respectively. Considering that the construction period of the company's distribution grid energy-saving transformation project is about one year, both projects are expected to be put into operation in the second half of this year, which will bring new support to revenue and profit at that time. It is proposed to plan a non-public stock offering to acquire the energy-saving assets of the distribution grid of the integrated energy service company under the State Grid Corporation and to supplement working capital. According to the announcement, in order to resolve competition issues in the industry while optimizing the capital structure and improving the financial situation, the company plans to issue non-public shares to no more than 35 specific investors to raise capital to acquire the energy-saving assets of the distribution grid of the provincial integrated energy service company under the State Grid Corporation and supplement working capital. The number of shares issued this time does not exceed 30% of the company's total share capital before issuance, and this issuance will not cause a change in the company's control. This issuance will help enhance the financial strength of listed companies and lay the foundation for expanding and strengthening the energy-saving business of distribution grids. As the only energy saving platform for distribution grids in the State Grid, the company's energy saving service revenue has increased year by year since 2016, energy saving service revenue has increased year by year, from 370 million yuan in 2016 to 1.25 billion yuan in 2019, an average annual increase of 50.0%. If this non-public offering is successfully completed, the company is expected to receive a number of high-quality energy saving projects, and profit growth can be expected. The State Grid is vigorously developing integrated energy services, and the company is expected to benefit. The State Grid Corporation regards the integrated energy service business as an important future profit growth point. In 2019, integrated energy services achieved business revenue of 11 billion yuan, an increase of 125% over the previous year. According to the State Grid development strategy plan, its integrated energy service business will achieve revenue of 80 billion yuan in 2025, becoming the main driver of the industry; in 2030, it will exceed 300 billion yuan and become a demonstration leader in the integrated energy service industry. State Grid Integrated Energy Service Group was founded in January 2013, formerly known as State Grid Energy Saving Service Co., Ltd., the parent company of Fuling Electric Power. Currently, Fuling Electric Power's distribution grid energy saving business is closely related to integrated energy services, and is expected to benefit from the major development of the State Grid integrated energy service business. Investment advice: increase holdings - A investment rating, target price of 23 yuan for 6 months. We expect the company's revenue growth rates in 2019-2021 to be 5%, 10%, and 10% respectively, and net profit of 460 million yuan, 512 million yuan, and 590 million yuan respectively. Risk warning: The progress of the project has fallen short of expectations, and the progress of reforms on the electricity sales side has fallen short of expectations.