Summary of the Third Quarterly Report In the third quarter of 2016, the company achieved operating income of 198 million yuan, a year-on-year decrease of 43.02%, and net profit attributable to the parent company of 17.406,700 yuan, an increase of 66.85% over the previous year; total operating income from the beginning of the year to the reporting period was 1,043 million yuan, an increase of 29.47% year-on-year, and net profit attributable to the parent company of 119 million yuan, an increase of 281.71% year-on-year. Financial Review 1. The company's revenue decline in the third quarter was mainly due to the poor performance of traditional shipbuilding and offshore engineering businesses, but the overall growth rate in the first three quarters was impressive, mainly due to the increase in natural gas sales and the acquisition of Gold Shipping. The company's three major businesses, namely defense equipment and related business, shipbuilding and offshore engineering business, and clean energy business, were carried out in an orderly manner, and completed the 2016 business plan well, and performance throughout the year was promising. 2. The company completed the acquisition of Jin Haiyun in the first half of the year. Jin Haiyun is mainly engaged in R&D, production and sales of high-performance polymer materials products and maritime and air equipment products. The products are widely used in maritime rescue and special military applications. The acquisition of Jinhaiyun will not only increase the company's performance, but also strongly promote the transformation and upgrading of the company's traditional business. Relying on existing ship design and general contracting capabilities of shipbuilding engineering, the company leverages the manufacturing advantages and qualification advantages of Jinhailong marine life saving and marine equipment, collaborates and complements sales channels and industry chains, actively develops and reserves relevant technology, and explores and enters the field of military auxiliary ship development in due course. It is expected to open up new development space for the defense equipment industry based on the sea. 3. Profit forecast and investment advice. Although the downturn in the shipbuilding market and the slump in the offshore engineering market have had an impact on the company's traditional business, the company has successively acquired Woking Natural Gas and Jet Energy Transportation and Jin Shipping to intervene in the clean energy business and defense equipment business, taking the first step in the transformation and upgrading of military and civilian integration. It not only guarantees current performance, but also has considerable room for long-term growth. Considering the merger table, we predict that the company's 2016-2018 EPS will be 0.35, 0.41, and 0.52 yuan/share, respectively, and the corresponding EPS will be 75/63/50 times, respectively. Given the company's future development of new markets in the military products field, we give the company a recommended rating. Risk warning: Traditional business is declining; new market development falls short of expectations.