Matters: The performance of the first three quarters declined. On October 27, the company released the third report of 2016. The company achieved a total operating income of about 627 million yuan in the first three quarters, a decrease of 13.60% over the same period last year, and net profit attributable to shareholders of listed companies of 83.49 million yuan, a decrease of 18.66% from the same period last year. Ping An's view: The performance of the first three quarters declined year-on-year, and the downstream performance of coal machines or changes in the current supply-demand relationship: the trend of the first three quarter results revealed in this three-quarter report is in line with our previous predictions — in the first coverage report for the company on July 31, 2016, we predicted a net profit drop of about 20% and operating income of about 14% for the full year of 2016. The main contributor to the company's current operating income is still the coal machine business. With the arrival of winter, compounded by the impact of supply-side reforms to remove production capacity since this year, the company's downstream coal mining industry may have a shift in the relationship between supply and demand, resulting in a situation where supply is in short supply. If the coal industry's capacity removal policy relaxes, it is expected to drive demand for coal machines and have a favorable impact on the company's performance. The pace of entry into the field of new energy vehicles shows good execution: the company invested in the establishment of a holding subsidiary, Hefei Chuangda New Energy, in April 2016, and began the pace of deploying the NEV sector. Then, in August, the company's holding subsidiaries Hefei Chuangda and Chuangli Puyu signed a strategic cooperation framework agreement with China Aviation New Energy, agreeing that under the same conditions, China Aviation New Energy will prioritize procurement of Chuangli Puyu and Hefei Chuangda products; in September, the company invested 100 million yuan to establish Shanghai Chuangli New Energy Vehicle Operation Co., Ltd. to carry out sales, operation, leasing and maintenance services for new energy vehicles; in October, the company's controlling shareholders plan to acquire Yineng Electronics, a leader in the power battery system and battery management system segment, and plans to transfer it to listed companies in the future to improve the company's NEV industry layout. The pace at which the company entered the field of new energy vehicles within a few months demonstrated its strategic determination and good execution. The company has strong technical capabilities and good market channels, and future prospects are worth looking forward to. Investment suggestions: As coal supply is in short supply in winter, demand for downstream coal engines may grow; the company's strategic layout in the field of new energy vehicles reflects the company's good execution. We maintain our judgment that an inflection point in the company's performance is imminent. The company's three-quarter report performance is in line with our previous profit forecast. There is no profit forecast adjustment here. The estimated EPS for 2016-2018 is 0.16 yuan, 0.30 yuan, and 0.45 yuan, respectively, and the corresponding PE is 83 times, 44 times, and 30 times, respectively. Considering the possibility that the company's three-power system production capacity construction progress has exceeded expectations, maintain the “recommended” rating. Risk warning: (1) the progress of new production capacity construction falls short of expectations; (2) sales of new products fall short of expectations