The company recently released its 2017 semi-annual report. In the first half of the year, the company achieved operating income of 975 million yuan, a year-on-year decrease of 37.56%; net profit of 81 million yuan, a year-on-year decrease of 28.34%. The review is below. Operating income has declined, and stable gross margin and cost control have shown results. The company achieved operating income of 975 million yuan in the first half of '17, a year-on-year decrease of 37.56%. The main reason is that the Xiamen Lianxin project, which has a large contract value, entered a construction intensive period in the first quarter of 2016, confirming that more revenue led to a higher base figure. The company's second-quarter revenue improved significantly compared to the first quarter. The year-on-year growth rate of second-quarter revenue rose from -47.64% in the first quarter to -16.25%. The company has 45 unfinished projects, with a total value of 1,525 billion yuan. With the improvement of upstream clean room design capabilities and related regulations in the second half of the year, the implementation speed is expected to accelerate. In the highly marketable clean room field, the company estimates equipment, materials, labor, and other costs through internal management measures such as the SAP ERP system to carry out detailed cost management on the cost side. After removing the impact of “business reform and growth,” the company's overall gross profit margin in the first half of the year was 13.95%, a slight increase from 13.55% in 2016, indicating that the company has achieved certain results in cost control. The expense ratio declined slightly, and the net interest rate increased. The company's expense ratio for the first half of '17 was 2.95%, down 0.25 percentage points from 2016. Among them, the sales fee rate increased 0.05 percentage points year on year; the management fee rate increased by 1.50 percentage points, mainly due to an increase in wages and intermediary agency service fees; and the financial expenses rate fell 0.3 percentage points year on year because the company's IPO raised a large amount of interest income. As the cost ratio for the period declined, the company's operating efficiency improved markedly. In the first half of the year, it achieved net profit of 81 million yuan, a year-on-year decrease of 28.34%, less than the decline in revenue; net interest rate increased 0.38 percentage points to 8.31% from 7.93% in 2016. Continuously strengthening investment in R&D, leading the future, the company mainly focuses on cleanroom engineering projects for high-tech plants in IC semiconductors, optoelectronics and other fields in the electronics industry. It is a high-end field in the cleanroom engineering industry. It has the characteristics of high cleanliness level, large investment scale, large construction area, complex system integration, and high engineering quality requirements, which places high demands on the technical level of enterprises in the clean room engineering industry. Taking advantage of its listing, the company continues to increase investment in scientific research and further consolidate its technological strength. In the first half of the year, the company spent 23.48 million yuan on R&D, an increase of 28.61% over the previous year. Through our own R&D company, the leading air molecular pollution (AMC) control technology in China has been gradually formed, and practical application results have been achieved. The technical advantages are obvious, and it is expected to gain a larger market share in the fierce market competition. Investment suggestions: The company's cost control is strict, and gross margin has increased; the cost ratio has been reduced during the period, and operating efficiency has improved; it continues to increase scientific research expenditure to occupy a high point in technology. It is estimated that the EPS from 2017 to 2019 will be 0.90, 1.03, and 1.13 yuan/share, and the corresponding PE will be 22, 19, and 17 times, giving it an “increase in holdings” rating for the first time. Risk warning: investment growth continues to decline; industry demand falls short of expectations