Introduction to this report: The annual report performance was slightly lower than expected, and Shanghai Mitsubishi's net profit fell by about 25%. Renew demand to relay real estate, and install elevators to meet policy catalysts. Key investment points: Conclusion: The annual report performance was slightly lower than expected, and Shanghai Mitsubishi's net profit fell by about 25%. Renew demand to relay real estate, and install elevators to meet policy catalysts. Considering the impact of the epidemic, the growth of new real estate construction area is under pressure. EPS in 2020-2022 was reduced to 1.12 (-0.19), 1.23 (-0.26), and 1.32 yuan, and the target price was lowered to 16.8 yuan, corresponding to 15 times PE in 2020, and the increase in holdings. The company's annual report performance was slightly lower than expected, and Shanghai Mitsubishi's net profit fell by about 25%. ① The company's 2019 annual report revenue was 22.12 billion yuan, up 4.16% year on year; net profit to mother was 1.08 billion yuan, down 14.9% year on year; net profit after deducting non-return to mother was 1.0 billion yuan, down 16.7% year on year; performance was slightly lower than expected. ② In 2019, the company's elevator equipment sales revenue was 15.32 billion yuan, up 4.9% year on year; elevator sales volume was 89,000 units, up about 10.0% year on year. Measured by revenue from elevator equipment sales, the elevator unit price dropped slightly by about 4.7 percentage points. The company's installation and maintenance revenue was 5.49 billion yuan, an increase of 4.5% over the previous year. ③ The subsidiary Shanghai Mitsubishi (holding 52% shares) had revenue of 21 billion yuan in 2019, up 4.7% year on year; net profit of 1.32 billion yuan, down 24.7% year on year; net interest rate of 6.3%, the lowest level since 2012. Renew demand to relay real estate, and install elevators to meet policy catalysts. ① The aging of elevators, demand for stock renewal relays new demand for real estate; the potential demand to install 2 million elevators in old neighborhoods, and the increase in subsidies for old city renovation policies is expected to expand rapidly. ② In 2019, the number of old elevators renovated by Mitsubishi in Shanghai increased by 50% year on year. About 4,000 elevators were installed in old houses, with a year-on-year growth rate of more than 30%. Shanghai Mitsubishi has an outstanding competitive advantage and has fully benefited from the demand for “two old” elevators. Catalysts: Improvement of incentive mechanisms, extension of intelligent manufacturing. Risk warning: New real estate starts have declined sharply, and industry competition has intensified.