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 oilfield services and oil and gas sales was insufficient. The first three quarters achieved revenue of 78 million yuan, a year-on-year decrease of 5.67%. 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 expenses, 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 oil and gas field environmental protection equipment production and development base construction project to improve the production and service capacity of vehicle-mounted environmental protection equipment for mud without landing and fracturing return liquid treatment. It is expected to increase revenue by 875 million yuan after delivery. In 2015, the company launched non-landing mud 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. Subscribing for 25% of China's shares, becoming the second largest shareholder, the company 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 Jiahua has high barriers and scarce professional qualifications. It is an enterprise with civil and military nuclear safety equipment manufacturing qualifications, weapon research and development qualifications, second-level confidential qualifications, and military products and nuclear industry quality management system certification. It has long been engaged in the manufacture of equipment such as nuclear fuel purification and conversion, 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. 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, 066 million, and 101 million yuan in 16-18. The corresponding EPS is 0.01 yuan, 0.17 yuan, and 0.26 yuan, and the corresponding PE is 983X, 70X, and 46X, maintaining the recommended ratings. 5. Risk warning: Oil prices continue to be sluggish, and new business development falls short of expectations.