The leading position in the ceramic industry is remarkable, and innovative products maintain high gross profit margins. The company is a national high-tech enterprise and the only domestic service provider for the full business chain of ceramic products. The company's R&D strength, product application development and technical service capabilities are in a leading position in the industry. The company's main products include ceramic ink, fully polished printing glazes and basic glazes. Customers include the most famous domestic ceramic wall and floor tile manufacturers such as Dongpeng, Jinyitao, Xinzhongyuan, and Marco Polo. In recent years, China's architectural ceramics market has been fiercely competitive, and industry reshuffle has intensified. For example, in 2019, China's ceramic tile production was 8.2 billion square meters/yoy -8.8%. However, the company insists on steady progress and fully cooperates with customers in the development of new products, and has become the main driving force for technological progress and industrial upgrading in the architectural ceramics industry. Although affected by the industry in 2019, the company sold 121,600 tons of glazed materials, down 11.86% year on year, but it still maintained a high gross profit margin of 32%, and the leading position is remarkable. Continue to increase new energy materials to open up room for growth. The world continues to promote electrification, and demand for power batteries as the core component has grown rapidly. The market size grew from 2.7 GWh in 2012 to 113.4 GWh in 2019, and the CAGR reached 71% during this period. In line with market demand, the company actively explores the application of lithium battery materials, and has laid out various businesses such as ternary precursors, cobalt salts, and conductive agents, forming strong comprehensive strength and opening up room for growth for the company. In 2019, the company achieved production and sales of 34,300 tons/33,300 tons of new energy materials, +3.05%/7.65% year-on-year respectively. Cobalt salt/tertiary precursor. The subsidiary Jiana Energy's main products are cobalt chloride, cobalt sulfate, cobalt carbonate, cobalt oxalate, and tertiary precursors. Since cobalt is associated with copper, the company also operates electrolytic copper. In 2019, the company's three precursors achieved revenue of 790 million yuan, with a gross profit margin of 13.8%; cobalt salt achieved revenue of 540 million yuan, with a gross profit margin of 20.9%; and electrolytic copper achieved revenue of 290 million yuan, with a gross profit margin of 34%. The company's ternary precursor products have mature technology and stable quality. It has high-quality customers such as Zhenhua Technology and Xiamen Tungsten Industry. High-nickel precursors have been mass-produced and verified by downstream customers, laying a good foundation for development. In 2019, the company promoted the construction of precursor production capacity. Currently, it has a production capacity of 22,000 tons/year of three precursors, which will further unleash performance flexibility in the future. Looking ahead, negative factors such as the sharp drop in cobalt prices in 2019 and the calculation of inventory impairment are likely to be eliminated. Currently, cobalt prices are at the bottom of history. Prices are expected to rebound as demand recovers, and the company's cobalt salt business is expected to improve marginally. Conductive agents: The subsidiary Qingdao Haoxin is a leading domestic enterprise that has achieved large-scale production of nanomaterial conductive agents. Its main products are graphene and carbon nanotube conductive agents. In 2019, it achieved revenue of 240 million yuan and a gross profit margin of 35.5%. The main customers are leading lithium battery companies such as BYD. Production capacity reached 20,000 tons in 2019. As demand for downstream power batteries grows rapidly, the company is expected to continue to benefit, and the business is expected to grow rapidly. At the same time, the company is promoting self-sufficiency in raw materials and increasing upstream powder and slurry production capacity. The increase in the self-sufficiency rate of raw materials is expected to drive the improvement of the quality and profitability of the company's conductive agent products. Forward-looking layout of hydrogen energy materials to promote the development of the hydrogen fuel cell industry. As one of the key components of fuel cell systems, membrane electrodes directly affect the performance, life, and cost of proton exchange membrane fuel cells, accounting for 60-70% of the cost of electric reactors. Currently, this product is highly dependent on imports. According to GGII research data, the sales scale of China's membrane electrode market in 2019 was 228 million yuan. GGII estimates that the demand for hydrogen fuel cell membrane electrodes in the automotive sector in China is expected to reach 2.3 billion yuan by 2025. In 2019, the company and Reshaping Technology and Ma Dongsheng jointly funded the establishment of Dow Spruce to develop and sell membrane electrode materials. Mr. Ma Dongsheng is one of the founders of Guohong Hydrogen Energy. Guohong Hydrogen Energy is a Ballard joint venture and has now built the world's largest fuel cell stack production line. Currently, Dow Spruce has formed a hydrogen fuel cell membrane electrode development team with Dr. Dustin Banham (who worked for Ballard and is deeply involved in membrane electrode research and development) as the core. Partner Reshaping Technology is an important domestic fuel cell power system company. Currently, it accounts for about 50% of the domestic hydrogen fuel cell system market share. Currently, the company is doing early development based on domestic commercial vehicle application scenarios. It is expected that 1 to 2 products will enter the market in 2020, which is expected to contribute to performance in 2021. First coverage, giving the company a “buy” rating: the company is expected to achieve net profit of 1.52, 2.51, and 352 million yuan in 2020-2022, respectively, with corresponding EPS of 0.33, 0.55, and 0.77 yuan respectively. As a leader in ceramic glazes, the company has a comprehensive layout of new energy materials. The company is expected to form a medium- to long-term upward performance inflection point in 2020, covering for the first time, and giving the company a “buy” rating. Risk warning: policy risk; raw material price risk; capacity construction falls short of expectations; demand declines due to the spread of the epidemic; new material development and progress falls short of expectations.