Investment points 1. The main business is constrained by the continued downturn in international oil prices. The business structure of international oil companies is dominated by oilfield equipment, accounting for more than 60% of the main business revenue. Since 2014, international oil prices have continued to fluctuate at a low level, capital expenditure in the global petroleum industry is at a low level, and demand for oilfield equipment is insufficient. Affected by this, oilfield equipment achieved revenue of 129 million yuan in the first three quarters, a decrease of 31.61% over the previous year. At the same time, the growth of oil field services and oil and gas sales was insufficient. The first three quarters achieved revenue of 78 million yuan, a decrease of 5.67% over the previous year. In terms of net profit, net profit of 2,094 million yuan was realized in the first three quarters, an increase of 150.92% over the same period last year. The reason is that global oil prices rebounded slightly in the second quarter and the industry gradually picked up. At the same time, the company actively controlled cost expenditure, and the oilfield service and oil and gas sales business achieved an increase in profit. The company's three-fee rate remained stable during the reporting period. 2. Set up a fixed increase in the oilfield environmental protection business and cultivate new growth points. The company completed a fixed increase in August, raising a total capital of 708 million yuan, mainly to invest in the construction project of the oil and gas field environmental protection equipment production and research and development base, and increase the production and service capacity of vehicle-mounted environmental protection equipment for the treatment of slurry without landing and fracturing return liquid. It is estimated that it will increase revenue by 875 million yuan after delivery. In 2015, the company launched mud no-landing treatment equipment and a special fracturing backwater treatment vehicle, becoming the first domestic enterprise to launch a special vehicle for fracturing backwater treatment. The company promptly formed an operation team and actively participated in the bidding for environmental protection treatment projects in oil and gas fields such as Changqing Oilfield and Yanchang Oil Mine. At present, it has begun to provide customers with environmental services for mud no-landing disposal and fracturing backwater treatment, and the company is in an absolute leading position in the industry. The new environmental protection law imposes strict requirements on oil field environmental protection. Previously, oil fields without environmental protection equipment would be equipped with corresponding equipment, and the market capacity would reach 10 billion dollars, which is beneficial to the company's future development. 3. The company subscribed to 25% of the shares of Zhongke Jiahua, becoming its second largest shareholder, successfully subscribed for 25% of CNNC Jiahua's shares and signed a capital increase and expansion agreement with an investment amount of 35 million yuan. After the investment was completed, the company became the second largest shareholder of CNNC Jiahua. CNNC has high barriers and scarce professional qualifications. It is an enterprise with manufacturing qualifications for civil and military nuclear safety equipment, weapons research and development qualifications, second-level confidential qualifications, and military products and nuclear industry quality management system certification. It has been engaged in the manufacture of equipment for nuclear fuel purification and transformation, nuclear spent fuel processing, etc., and its market share is very high. With the continuous development of the domestic nuclear power industry, the supply demand for nuclear fuel is also growing, and the market for radioactive storage and transportation containers, equipment needed to expand the production and construction of nuclear fuel systems, and non-standard equipment for major spent fuel reprocessing plants has huge potential for growth. 4. Profit forecast: The company is expected to achieve net profit of 0.5 million yuan, 66 million yuan, and 101 million yuan in 16-18, corresponding EPS of 0.01 yuan, 0.17 yuan, and 0.26 yuan, and corresponding PE of 983X, 70X, and 46X, maintaining recommended ratings. 5. Risk warning: Oil prices continue to be sluggish, and new business development falls short of expectations.