The decline in raw material prices is compounded by investment income. The company announced the 2018 annual report and 2019 quarterly report. In 2018, the company achieved operating income of 3.26 billion yuan (YoY +6.1%), net profit to mother of 150 million yuan (YoY -13.9%), gross profit margin of 37.1% (YoY-2.4pct), and a net profit margin of 4.6% (YoY-1.1 pct). 2019Q1 2018Q4 revenue of 990 million yuan (YoY +7.2%), net profit to mother of 34.46 million yuan (YoY -42.1%), gross profit margin 37.7% (YoY-0.8pct), net profit margin 3.5% (YoY-3.0pct). The annual report is basically in line with the performance report. 2019Q1 revenue of 860 million yuan (YoY +4.9%), net profit of 48.34 million yuan (YoY +12.3%), gross profit margin 38.0% (YoY-0.5pct), net profit margin 5.6% (YoY+0.4pct). The main reasons for the decline in net profit due to the decline in 2018:1) gross margin of household appliances fell by 5.5 pct; 2) R&D expenses in 2018 were 150 million yuan, up 14% year on year; 3) the company lost 12.31 million yuan in investment in Qianhai Reinsurance, and the robotics business also lost money. At present, 2019Q1 profits have resumed good growth. We estimate that the main reasons are: 1) the price of raw materials has declined; 2) the investment income was 10.14 million yuan, compared to -500,000 yuan in the same period last year, mainly due to the increase in investment income and forward settlement income of joint ventures. In 2018, the robot business grew beautifully by product category. In 2018, the household appliance business revenue was 370 million yuan, up 2% year on year; the cookware business revenue was 2.61 billion yuan, down 0.02% year on year; the robot business revenue was 210 million yuan, up 336% year on year, achieving sales of 1,500 robots (including internal sales), an increase of 50% over 2017, and the robot business is growing at a beautiful rate. By region, domestic sales revenue in 2018 was 2.07 billion yuan, up 5.8% year on year; 2018H2 decreased 2.7% year on year; export sales revenue was 1.12 billion yuan, up 5.1% year on year; and 2018H2 increased 16.0% year on year. The main business is developing steadily, and the robot business has brought new growth points for small household appliances and cookware into a major cycle of consumption upgrades. As a leading cookware company, the company is also actively developing the small household appliance business, which will benefit from the sharp rise in volume and price brought about by the consumption upgrade. In addition, the company continues to develop the robotics business. The robotics business grew beautifully in 2018 and is expected to continue to grow well in the future. On the one hand, the robotics business will improve the company's level of intelligence and automation, and on the other hand, the robotics industry will continue to bring new growth points to the company. Investment recommendations We expect: 1) subsidiaries such as Qianhai Reinsurance to gradually contribute investment income; 2) consumption upgrades will continue and market concentration will continue to increase. As a leading cookware company, market share will continue to increase; 3) the robotics business will develop well. Based on this, we predict that net profit due to mother in 2019-2021 will be 1.6/1.9/210 million yuan, with year-on-year increases of 10%/13%, respectively. 2019Q1 profits will resume growth. The latest closing price corresponds to 18.6 times the 2018 PE valuation. Referring to a comparable company's average valuation of 20xPE in 2019, the company will be given a reasonable value of 9.4 yuan/share to maintain the “gain” rating. Risk warning: Prices of raw materials have risen; exchange rates have fluctuated greatly; the development of the robotics business has fallen short of expectations.