The company released its three-quarter report on the 28th, and we invited the company's management to a conference call on the 29th. The company's order confirmation for south-to-north water transfers is still slow, and the cost rate is on the rise, maintaining the “Prudent Recommendation - A” investment rating. The company's net profit for the first three quarters increased 4% year-on-year, achieving an EPS of 0.23 yuan. In the first three quarters of this year, the company achieved revenue, operating profit and net profit of 350 million yuan, 89 million yuan, and 39.06 million yuan respectively, up 46.4%, 11.5% and 4.0% year on year. Net profit after deduction in the first three quarters increased 23.4% year on year, achieving a total EPS of 0.23 yuan. Looking at a single quarter, the company's revenue and net profit for the third quarter increased by 78% and 31% year on year, achieving an EPS of 0.12 yuan, and the third quarter results were basically the same as in the second quarter. The progress of confirming orders for south-to-north water transfer in the third quarter was still slow, and the sales expense ratio increased markedly. The company has received contracts for a total of 930 million yuan for the South-to-North Water Transfer Project in Henan, Hebei and Tianjin. We expect to confirm revenue of around 260 million yuan by the end of September, accounting for 28%. Among them, the supply of the Tianjin South-to-North Water Transfer (contract amount of 90 million yuan) has not yet started. The Hebei South-to-North Water Transfer is expected to confirm revenue of about 110 million yuan and 130 million yuan in the second and third quarters of the Henan South-to-North Water Transfer, respectively (contract amount of 630 million yuan) due to the long construction period, or only a small portion of revenue (contract amount of 210 million yuan). In the third quarter, the company's gross margin reached 40% and the sales expense ratio was 18%, all of which increased significantly, mainly due to the higher gross margin of projects in the northwest region and the higher freight costs of the South-to-North Water Transfer Project in Henan. At the end of the third quarter, the company had orders of about 1.1 billion yuan in hand. The fourth quarter results focused mainly on the confirmation of orders for the transfer of water from South to North by Henan. At the end of the second quarter, the company's on-hand orders with unconfirmed revenue amounted to about 1.21 billion yuan. We expect the company's new orders in the third quarter to be about 150 million yuan, the company's concrete pipeline revenue for the third quarter was about 250 million yuan (estimated at 70% of revenue), while the company's on-hand orders at the end of the third quarter were about 1.1 billion yuan. According to the contract agreement, all orders for the transfer of water from south to north in Henan should be completed before the end of this year. Currently, the company's remaining order amount in Henan is still about 400 million yuan, and its revenue confirmation progress will significantly affect the company's performance in the fourth quarter. The company has thematic investment opportunities and maintains a “Prudent Recommendation - A” investment rating. The company's current on-hand orders account for 142% of last year's revenue, and the base for the fourth quarter of last year is low, so it is easy to achieve growth. If there is a situation where the revenue recognition process for the transfer of water from south to north exceeds expectations or if the municipal pipeline network construction is further strengthened, then the company has thematic investment opportunities. The company's EPS for 2013-2015 is expected to be 0.28, 0.33, and 0.37 yuan. The current stock price is 28 times that of PE in 2013, maintaining the “Prudent Recommendation - A” investment rating. Risk warning: Revenue recognition falls short of expectations, and expense ratios continue to be high.