Key investment events: The company released its quarterly report and achieved revenue of 426 million yuan in the first quarter, a year-on-year decrease of 18.66%; net profit of 61.44 million yuan, an increase of 4.86% year-on-year. The trend of improving gross margin is further strengthened, and revenue growth in the second quarter is expected to resume: Q1 of this year is a special situation. Under normal circumstances, the company's Q1 working days are expected to be around 70 days, but this year's situation is special. Referring to the company's local regulations, we expect to convert it into a full working day of about 50 days, affecting production. At the same time, the inventory value for the first quarter was 6100 million yuan, an increase of about 10% over the end of last year. It is expected that the above two major factors will adversely affect the company's revenue in the first quarter. Looking ahead to the second quarter, the country will gradually recover, and the company will benefit Revenue growth is expected to resume due to the trend of increasing charging power and expanding results in industrial control and other fields. At the same time, the company's Q1 gross margin reached 33.58%, an increase of 6.79 pct over the previous year, once again strengthening our previous judgment on the improvement of the company's gross margin. The core driving force comes from long-term positive factors such as the company's product structure improvement and raw material self-sufficiency rate. Looking ahead to Q2, the company's gross margin is expected to rise further, driving the company's profit to an upward inflection point. The trend of increasing charging power in the 5G era has been established, and prosperity is expected to continue to rise: 5G mobile phones generally consume more power, consumer requirements for charging speed are increasing, and corresponding mobile phone charger power is increasing rapidly. In 2019, flagship models generally used 30-40W fast charging, and in early 2020, 5G flagship models have increased their power to 55W and 65W levels, driving the increase in the specifications and quantity of supporting capacitors. According to disassembly data, the standalone value of a 65W charging head has increased by more than 50% compared to 40W products. At the same time, as a core supplier of capacitors for 3C power supply products in China, the company previously mainly supplied charging head manufacturers. Since 2019, the company's direct supply to major customers has achieved major breakthroughs, and its share has continued to increase, which is the core beneficiary of increased charging power. In addition, the company is also actively expanding markets such as notebook power supplies, which will further open up room for consumer products to grow. Furthermore, in recent years, the investment of the Big Three Japanese companies in aluminum electrolysis has gradually declined, while the demand side has been growing steadily, and the recent emergency situation has further highlighted the stability advantages of the domestic supply chain. It is expected that terminal manufacturers' awareness of import substitution will be further strengthened, providing a favorable industrial environment for leading domestic manufacturers to continue to break through upward. The company's continued breakthroughs in solid state, MLPC and other fields are expected to drive the company to further exceed expectations. Upstream and downstream continue to expand, and the competitive core continues to strengthen. The company has upstream core equipment design capabilities. The company has expanded production capacity in accordance with the latest automation standards, with a full production capacity of less than 300 people. The corresponding per capita output has more than doubled compared to now. The new convertible debt fundraising plant is designed according to this standard. It is expected that production will be put into operation around the end of 19. At the same time, the company's continuous expansion of upstream core raw materials is expected to drive a rise in the profitability center. This point has been gradually verified in 2019, and there is still room for further improvement in the future. Investment advice: The resonance between improved gross margin and demand recovery drove profit to a record high. Considering the actual industrial situation in the first quarter, we expect the company's net profit for 2020/21/22 to reach 4.06/5.01/606 billion yuan, EPS to be 1.04/1.29/1.55 yuan, growth rate 20.24%/23.52%/20.86%, and “buy” rating. Risk warning: Production capacity release progress is low expectations, high-end market expansion is not expected, and mobile phone shipments have declined sharply.