The performance of the company's 2016 three-quarter report decreased by 28.24% year-on-year in line with expectations: the company released its 2016 three-quarter report. The company achieved operating income of 1,688 billion yuan in the first three quarters, a year-on-year decrease of 11.50%; realized net profit attributable to shareholders of listed companies was 284 million yuan, a year-on-year decrease of 28.24%, corresponding to an EPS of 0.52 yuan. In the third quarter, the company achieved quarterly revenue of 471 million yuan, a year-on-year decrease of 0.56%, a decrease of 1.03% over the previous year; realized net profit attributable to shareholders of listed companies of 41.14 million yuan, a year-on-year decrease of 50.52%, a decrease of 42.49% over the previous year, corresponding to an EPS of 0.08 yuan. The thermal power business was under pressure, and profit levels declined: the company's feed-in electricity prices and heating prices were all lowered in the first half of 2016, but since this year, coal prices have increased significantly, causing the company's overall thermal power business to be under pressure. The overall gross margin for the third quarter fell 8.59 percentage points to 20.06% in a single quarter. Yixian New Energy's 20MW and Cangzhou Renewable Energy's 50MW total 70MW of grid-connected photovoltaic power plants, which are expected to contribute about 35 million yuan in net profit in the first three quarters. The period expense ratio decreased, and the cash flow from operating activities improved: in the first three quarters of 2016, the company's period expense ratio was 4.75%, down 10.47 percentage points from the previous year; among them, the management expense ratio decreased by 5.71 percentage points to 2.31%, and the financial expense ratio decreased by 4.77 percentage points to 2.44%. The company's inventory turnover days for the first three quarters of 2016 decreased by about 6 days to 17 days year on year, and the number of accounts receivable turnover days decreased by about 15 days to 58 days year on year. The company's balance ratio at the end of the third quarter of 2016 was 48.59%. The company's net cash flow from operating activities in the first three quarters of 2016 was 191 million yuan, an improvement over the net inflow of 78.22 million yuan in the first three quarters of 2015. The pace of independent development of the clean energy industry is accelerating, and 2017 will usher in a peak in the commissioning of new projects: the company is actively developing new energy resources independently in surrounding provinces and cities such as Hebei, Beijing, Tianjin, Shanxi, Shaanxi, Inner Mongolia, and Gansu. According to the company's semi-annual report, PV projects such as the Laiyuan Qijiayu 30MW power station, Pingding Suoquan Town 50MW distributed, and Beijing Changping 3.7MW distributed are under construction; in addition, CRRC Shijiazhuang 5.5MW distributed photovoltaics and Heshun Dongfang New Energy's 200MW wind farm have also started project development. The company has also been approved for the 100MW frontrunner project in Yangquan, Shanxi. It is expected that 2017-2018 will usher in a peak of production of new projects. Set up a power sales company to participate in the electricity sales market and share the dividends of electricity reform: In July 2016, the company invested in the establishment of a wholly-owned subsidiary, Hebei Liangneng Electricity Sales Co., Ltd., to actively participate in market competition on the electricity sales side, which is conducive to leveraging the company's cogeneration advantages, extending and expanding the company's power business, enhancing the company's competitiveness in the regional power market, and sharing the dividends of power system reform. The investment and investment securitization platform of China Power Investment Corporation is close to fulfilling the contract: by the end of 2015, the cumulative installed capacity of China Power Investment Group reached 107.40 GW, and the share of clean energy reached 40.06%; however, the asset securitization rate was the lowest among the five major power generation groups, and there is a lot of room for improvement in the future. We judge that the company will be one of the best platforms for the securitization of China Power Investment Group's new energy assets; and China Power Investment Hebei's GW grade landscape operating assets have provided good investment targets. In 2013, the Group promised to inject high-quality assets from Hebei companies into listed companies within three years to resolve competition issues in the industry. The commitment expired in January 2017. Investment advice: Without considering asset injection, the company's 2016-2018 EPS is expected to be 0.66 yuan, 0.76 yuan, and 1.06 yuan, respectively, and the corresponding PE is 23.2 times, 20.3 times, and 14.6 times, respectively. The company will usher in the peak of production of new energy projects in 2017. China Power Investment Group's asset injection expectations are strong. Considering the high growth of the company's “big groups and small companies”, it has multiple themes such as state-owned enterprise reform, electricity reform, Beijing-Tianjin-Hebei, Winter Olympics, and nuclear power, maintaining the company's “buy” investment rating. The target price is 21 yuan, corresponding to 28 times PE in 2017. Risk warning: Group asset injection falls short of expectations; progress in the commissioning of new projects falls short of expectations; and the number of hours used by thermal power plants falls short of expectations.