I. Overview of events

The company released its three-quarter 2017 report on October 25, showing that its net profit in the first three quarters was 65.0597 million yuan, down 27% from the same period last year. At the current point in time, we pay more attention to the recovery of the industry next year and the layout of the whole industry chain of the company. We maintain the previous point of view: 1, in the context of the continuous expansion of oil and gas price differences and the substantial growth of natural gas heavy trucks, the gas station equipment business is likely to recover next year; 2, the company's current layout of the whole industry chain has achieved remarkable results, and diversified businesses such as engineering EPC will significantly thicken the company's performance.

II. Analysis and judgment

Natural gas heavy trucks continue to recover, and the construction of gas filling stations will benefit.

From January to September, the cumulative output of LNG heavy trucks reached 67000 vehicles (according to the statistics of the certificate production of the Ministry of Industry and Information Technology), a sharp increase of 571% over the same period last year. According to the statistics of the Clean Energy Association, there is no longer a surplus of domestic gas filling stations. The continuous improvement in downstream demand will be reflected in the increase in the number of LNG filling stations in the year after next year. After the new base of the company's high-tech western zone is put into production, the LNG/CNG capacity will expand nearly twice, and the production capacity will be sufficient.

The layout of the whole industry chain has achieved remarkable results, and diversification has thickened the company's performance.

Since listing, the company has successively acquired Corell, HTC and Chongqing Xinyu, which has improved the diversified layout of the natural gas industry chain and changed from a single equipment provider to an integrated clean energy equipment service provider. In the strategic cooperation agreement signed this time, projects such as comprehensive utilization of shale gas and safety (environmental protection) governance have increased the profit growth points of the company's engineering business, and the layout of the whole industry chain has achieved remarkable results. The engineering business will drive the company's equipment sales and thicken the company's performance at the same time.

Gasification of the Yangtze River is included in the strategic agreement, and the ship LNG market is broad.

According to the forecast of the Academy of Marine Transport of the Ministry of Transport, China will build a total of about 12-14000 inland river ships from 2017 to 2020. If 70% of them use LNG as fuel, there will be about 10,000 new LNG-powered ships. As one of the companies with the most perfect LNG layout of ships in China, the company will give priority to benefit. In this strategic agreement, the LNG ship filling station project and the LNG ship renovation project which can be undertaken by the company in the Gasification Yangtze River project are also included in the agreement.

Third, profit forecast and investment suggestions

It is estimated that in 17-19, the net profit of the company will be 169 million, 271 million and 320 million respectively, and the EPS will be 0.46,0.73,0.86 yuan respectively, maintaining the "highly recommended" rating.

IV. Risk hints

The policy of new energy vehicles has a crowding-out effect on the industry; the overfall of oil prices and the promotion of ship LNG are not as expected.