Events: The company released the 2019 annual report and the first quarterly report for 2020: (1) 2019 achieved revenue of 2,986 billion yuan, -15.73%; net profit of 24.01 million yuan, -89.09%; net profit of 24 million yuan, -89.09%; net profit after deduction of non-attributable net profit of 62.74 million yuan, -96.99%; EPS 0.05 yuan/share, ROE 0.99%; (2) 1Q20 achieved revenue of 456 million yuan, -40.61%; net profit of 8.3842 million yuan; net profit of 8.3842 million yuan; net profit from net income of 8.3842 million yuan; net profit from net income of 8.3842 million yuan; net profit from net income of 8.3842 million yuan; net profit from net income of 8.3842 million yuan; net profit from net income of 8.3842 million yuan; net profit from net income of 8.3842 million yuan; net profit from net income of 8.3842 million yuan; net profit from net income of 8.3842 million yuan; net profit from net income of 8.3842 million yuan 5,516,600 yuan; EPS -0.19 yuan/share, ROE 0.34%. Overall performance is in line with expectations. Prices of raw materials fluctuate, and inventory impairment losses are large. The decline in revenue in 2019 was mainly due to sharp fluctuations in the prices of raw materials such as ternary precursors and cobalt salt, and loss of 208 million yuan in inventory prices due to falling inventory prices. The decline in 1Q20 revenue was mainly due to the impact of the pandemic. By business: 1) Traditional main business: 19-year full-cast printing glaze business revenue of 180 million yuan, -18.39%, gross profit margin of 32.79%; basic glaze revenue of 12,400 yuan, -13.93%, gross profit margin 20.09%; ceramic ink revenue of 490 billion yuan, +2.24%, gross profit margin 32.10%; 2) New energy lithium battery materials: 19-year cobalt salt revenue of 542 million yuan, -33.84%, gross profit margin 20.94%; 17% , gross profit margin of 13.77%. The price of cobalt resources stabilized, and the profit level improved month-on-month in a single quarter. In 2019, the company's gross sales margin was 25.92%, down 4.97pct year on year; net sales margin was 0.69%, down 10.19pct year on year. The decline was mainly due to the sharp drop in the price of cobalt resources in 2019 and continued to be low, and bottomed out and recovered in August 19. The gross sales margin for 4Q19 and 1Q20 was 25.92%/23.87%, respectively, and the net profit margin was 0.68%/1.38%, gradually increasing month-on-month. The profitability of new energy materials is expected to pick up. Net operating cash flow improved month-on-month, and the accounts receivable cycle accelerated. The net operating cash flow for 4Q19 was 504 million yuan, +3.70% year over year and +194.74% month on month. The improvement was significant. The amount of operating cash flow in 1Q20 was 68 million yuan, -35.24% year on year and -86.51% month on month. The number of corporate receivables turnover days in 2019 was 51.83 days, which has improved quarterly since 1Q19. In 1Q20, the overall business cycle improved, mainly due to the impact of the pandemic. In 2019, the company's accounts receivable and notes were $414 million, -62.22% over the same period last year. The company expects to achieve production capacity of 100,000 tons of ternary precursors and 20,000 tons of metal cobalt salt in the next three years. In 2020, the company will integrate resources to fully promote the construction of the “30000 tons of power battery cathode material precursor project”, “annual output of 100 tons of highly conductive graphene, 150 tons of carbon nanotube production project”, and “project with an annual output of 5,000 tons of cobalt intermediates (metal volume) and 10,000 tons of cathode copper” to further improve the company's production capacity layout of new energy materials and leverage the company's synergistic effects from upstream raw materials, cobalt salts, and midstream ternary precursors to power battery cathode materials, enhancing the company's overall profitability and market competitiveness. Increase the hydrogen energy materials business growth points. In 2019, the company implemented a layout in the field of hydrogen energy materials and established Dow's Spruce as the main platform for hydrogen fuel cell core materials business, mainly engaged in the development and manufacture of membrane electrode components (MEA). The company also participated in Guangdong Taiji Power Technology Co., Ltd. to gradually improve the industrial layout of hydrogen energy materials. The conductive agent business has a broad market space. As a conductive agent for lithium batteries, carbon nanotubes can greatly improve the cycle life of lithium batteries, and the penetration rate of their use is expected to increase dramatically in the future. According to GGII estimates, the penetration rate of carbon nanotube conductive agents used in power lithium batteries is expected to increase from 31.8% in 2018 to 82.2% in 2023. The subsidiary Qingdao Haoxin is one of the few domestic enterprises that can achieve large-scale production and sales of graphene conductive agents. Downstream customers include BYD and Guoxuan, and continues to develop leading power batteries at home and abroad. In 2019, the conductive agent business revenue was 242 million yuan, with a gross margin of 35.47%. In the future, with the release of production capacity, the company's performance will increase. Investment suggestions: The company actively promotes production expansion projects in the field of new energy battery materials, and proactively lays out hydrogen energy materials business to achieve localization of membrane electrode components. Currently, the company is at the bottom of profit. As raw material prices stabilize, performance is expected to rise steadily. We expect the company's net profit for 2020-2022 to be 2.08/288/414 million yuan, giving it an increase in holdings rating. Risk warning: There is a risk that customer development falls short of expectations, downstream demand will decline, and production capacity investment will fall short of expectations.