The company's net profit from January to September 2016 fell 32.8% year on year, EPS 0.09 yuan, and from January to September 2016, the company achieved operating income of 235 million yuan, a year-on-year decrease of 32.8%; realized net profit of 25.41 million yuan, a year-on-year decrease of 61.1%, and earnings per share of 0.09 yuan. In the third quarter, the company achieved operating income of 87.06 million yuan, a year-on-year decrease of 22.5%, an increase of 46.5%; in the third quarter, the company achieved net profit of 10.1 million yuan, a decrease of 1.9%, an increase of 122.7%, and earnings per share of 0.03 yuan. The main reason for the sharp year-on-year decline in the company's performance during the reporting period is 1) The large orders that the company has already accepted has a long settlement cycle, and the revenue side has not yet been reflected. The company has announced a large order size of about 220 million yuan this year, of which about 190 million yuan of contracts have not yet been settled. 2) Although the company has recently successfully entered the MGGH, sewage treatment, chimney flue and curtain wall business fields, it has not been able to scale since the product is still in the promotion period. Product gross margin declined, and the cost ratio for the period increased. During the reporting period, the company's comprehensive gross profit margin was 33.1%, down 7.3 percentage points; sales expenses and management expenses were 7.0% and 17.9%, up 3.6 and 4.9 percentage points; and financial expenses were -0.1%, down 0.3 percentage points. The cost rate for the reporting period was 24.0%, an increase of 8.2 percentage points over the same period. In the third quarter alone, the company's comprehensive gross profit margin was 36%, down 1.8 percentage points, up 10 percentage points; sales expense ratio and management expense ratio were 6.0% and 18.0%, up 1.9 and 1.4 percentage points, down 1.6 and 2.5 percentage points; and financial expense ratio was -0.3%, down 0.7 percentage points, and up 1 percentage point. The cost rate for the period was 23.7%, an increase of 3.5 percentage points, and a decrease of 3.1 percentage points. In the third quarter, the company's comprehensive gross profit margin and period expense ratio improved markedly month-on-month, indicating that promotion of new products will gradually improve, and expenses will return to a normal track. Profit forecast and investment recommendations: The environmental layout continues to advance: The company recently spent 5.1 million yuan to acquire 51% of Kim Cole Power Equipment's shares. Kim Cole's business focuses on the production and manufacture of supporting equipment for MGGH, which effectively complements the company's existing product line. In the future, MGGH's ability to receive orders for MGGH products is expected to be strengthened. In 2017, the eastern region must complete the transformation of ultra-low thermal power emissions, and MGGH's business growth is expected to be realized in the near future. The growth logic has not changed: in the short term, the commissioning of new production lines for interior facades and curtain walls will guarantee the company's ability to obtain and execute contracts in the midst of a boom in rail traffic and infrastructure investment. In the long run, the application fields of new enamel materials continue to expand, opening up room for the company to grow. Through the company's early accumulation of customer resources in the thermal power field, the company's products have expanded from a single accessory module (enamel corrugated board) in the original thermal power emission system to fields such as air preactors, MGGH, chimney flues, and sewage treatment. Although the new product is still in the promotion period, it has great market potential. Recently, the company received an order for the chimney flue enamel board project from the Zaoquan Power Plant in Ningxia, worth 8.26 million yuan. The logic of new enamel materials is being continuously verified. Employee shareholding has been completed. Large-value contracts will gradually be fulfilled, and the trend of improving performance on a quarterly basis is expected to continue (low base for the fourth quarter of 2015). Rail transit investment and thermal power ultra-low emission transformation will drive the company's performance growth over the next 2-3 years; the application fields of new enamel materials will continue to expand, creating room for long-term growth. The company's net profit for 16-18 is estimated to be 79 million yuan, 134 million yuan, and 191 million yuan, and the corresponding EPS for 16-18 is 0.27 yuan, 0.46 yuan, and 0.66 yuan. Overstock ratings. Risk warning: The promotion of ultra-low thermal power emissions fell short of expectations; the revenue recognition cycle was extended.