Incident: Sifang Cold Chain's revenue for the first three quarters of 2017 was 690 million yuan, up 47.23% year on year, and net profit to mother was 116 million yuan, up 41.51% year on year; net profit after deducting non-return to mother was 113 million yuan, up 41.22% year on year, with earnings per share of 0.56 yuan. In the third quarter, single-quarter revenue was 250 million yuan, up 49% year on year; net profit to mother was 472.15 million yuan, up 45.7% year on year; net profit after deducting non-return mother was 45.32 million yuan, up 52.2% year on year. Growth in the third quarter exceeded expectations, and annual profit was raised to 175 million, corresponding PE in '18 was 24.3 times. Continue to recommend! Comment: 1. Revenue continued to rise sharply in the first three quarters, exceeding expectations. Revenue for the first three quarters increased by 47.23% year-on-year, exceeding market expectations. The revenue growth rates of 17Q1-Q3 in a single quarter were 33.4%, 60%, and 49%, respectively. The high growth in the first half of the year had some effects of a low base, while Q3 increased by nearly 50% in a single quarter, mainly due to continued market recovery, which exceeded expectations. Advance accounts in the first 3 Qs increased 46% year on year. Net profit attributable to mother increased by 41.51% year-on-year in the first three quarters. The increase was slightly lower than revenue growth, mainly due to an increase in equity incentive expenses. Sales expenses were 1.905 million yuan, up 10.4% year on year; management expenses were 7.1 million yuan, up 75.38% year on year. The increase was mainly due to increased R&D expenses and share payment expenses. The company's equity incentives were amortized about 24 million yuan, and 9.55 million yuan had already been calculated in the first half of the year; financial expenses were 4.78 million, with a difference of nearly 9.9 million yuan. The main reason was that about 60% of the company's revenue was international revenue. The amount of US dollars and US dollars receivable on hand was large, and exchange losses increased. 2. Special containers+refrigeration equipment are tight. Special containers are produced by Sifang Storage, a wholly-owned subsidiary of the company, accounting for more than 60% of the company's total revenue. Revenue in the first half of the year increased 59% year-on-year, and the third quarter also grew rapidly, growing more than 45%. The base for the first half of last year was low, but 16Q3 has already picked up, and 17Q3 has exceeded expectations by more than 45%! The main source of growth is the recovery of the global economy and the domestic economy. Domestic sales are growing very fast, and there is a clear need for renewal in the stock market. Its products are mainly tank containers, which rank third in the world. China is second only to CIMC, and currently has a market share of 12%. The company has a higher proportion of non-standardized containers than CIMC, and has a certain competitive advantage, and future growth can be expected. Compared to the expansion of major domestic sales this year, domestic companies' stocks of special containers are still not very large. This year's growth is mainly incremental. In particular, domestic logistics companies are expanding. Currently, under normal conditions, the tank can produce 20 units a day, or about 500 units a month. Normally, it takes 2 months from raw materials to delivery, and production is currently scheduled until the first quarter of next year. The refrigeration equipment business is produced by the parent company itself, accounting for about 30% of the company's total revenue. Revenue increased 29.4% year-on-year in the first half of the year, and increased even more in the third quarter, growing close to 40%. Since last year, the cold chain industry has been picking up as a whole. Apart from the original customers increasing purchases, it is mainly the expansion of new customers, especially customers in the central kitchen category. Orders for the first three quarters have remained the same as last year's. The gross margin was not lower than last year, deliveries have begun to be delayed, and production schedules are already tight. The normal delivery cycle is 2 months, and it is currently scheduled for March next year. The market share in 2016 was about 15%, and the market share has been rising steadily. In particular, food quick-freezing equipment is the largest in the country, with a market space of over 10 billion dollars for counterpart products. 3. The fund-raising project expands production capacity and actively promotes the IPO fundraising project of the Sifang Energy Conservation Extension Industrial Chain Company. The tank container expansion project and the cold chain equipment production expansion project were changed from transformation to new plant construction to further expand production capacity. After delivery, it is expected to achieve production capacity of 220 quick-freezing equipment, 2,200 refrigerated containers, and 7,300 tank containers, alleviating the current tight production capacity situation and helping the company develop. On September 28, 2017, the company announced that it plans to invest 300 million yuan to establish a wholly-owned subsidiary Sifang Energy Saving. Its main business includes developing new energy-saving building panels, insulation and sound insulation materials, and supporting products related to cold storage projects. The aim is to optimize the company's product structure and extend the industrial chain. This move will help enhance the company's overall competitive strength and pave the way for the company's long-term development. The investment and construction cycle is about 2 years. Currently, we have a lot of capital, so we want to develop a frozen industrial chain. Currently, the storage board material for cold storage is mainly PU, which is not environmentally friendly. The country may require all cold storage to use environmentally friendly materials before 2030, so it wants to lay out this direction, and it is also a nationally encouraged project. Sifang Energy Saving will use the existing quick-freezing cold storage board as the core. It can use the resources of existing customers, and also has a coordinating effect on the quick-freezing business, and will slowly expand to the energy-saving sector of other buildings in the future. 4. Raise profit forecasts and continue to maintain. The company is a “small but beautiful” company in the industry. 1) The company focuses on the field of special containers. Compared with CIMC Group, its advantage is higher than that of non-standardized containers. Its tank container is the third largest in the world, with a domestic market share of 12%. 2) The domestic market share of refrigeration equipment in 2016 was about 15%. The company's IPO fundraising project actively promotes the expansion of production capacity, establishes the Sifang Energy Saving and Optimizing Product Structure, and extends the industrial chain. Benefiting from global economic recovery+domestic economic recovery and consumption upgrades, growth continues to exceed expectations. Currently, production schedules are tight, and profit forecasts have been raised. The company's net profit for 17-18 is expected to be 175 million yuan and 230 million yuan, corresponding to PE 32 times and 24.3 times, so I continue to recommend it! 5. Risk warning: The recovery of the global economy fell short of expectations, and raw materials continued to rise.