Investment Highlights Three Quarterly Report Overview: The company achieved quarterly revenue of 473 million yuan, a year-on-year increase of 40.24%, a slight increase of 0.89%; net profit of 27.2631 million yuan, a year-on-year decrease of 11.89%, a year-on-year decrease of 15.80%; first-three quarter revenue of 1,283 billion yuan, a year-on-year increase of 34.43%; net profit of 82.7572 million yuan, a year-on-year decrease of 23.27%; net profit after deduction of 86.3032 million yuan, a year-on-year decrease of 17.88%; basic earnings per share of 0.10 yuan/share, a year-on-year decrease of 0.10 yuan/share, a year-on-year decrease of 15.80% 23.32%. The scale of revenue increased steadily, and net profit declined year-on-year due to rising raw material prices. The company's upstream raw materials are PTA (refined terephthalic acid) and NPG (neopentylene glycol), and their procurement costs account for 40%-45% and 35%-40% of the company's main operating costs, respectively. Since this year, with the further implementation of the national environmental protection policy, the prices of the main raw materials for polyester resin products have risen relatively rapidly. In the process, the price of finished products has lagged behind, causing the overall gross margin of the company's products to decline. As a result, there has been a marked increase in revenue scale, but net profit has declined year on year. In the first three quarters, the gross margin of the company's products was about 18.6%, down about 7 percentage points from 2016, but compared with the first half of '17 (19.7%), the downward trend in gross margin weakened. In addition, Lihuayi Shenjian, a subsidiary of the company, has now successfully put into operation a new pentylene glycol (NPG) project with an annual output of 30,000 tons, which can effectively reduce the company's costs, improve product quality, and effectively counter the risk of fluctuations in raw material prices. At the same time, the Ma'anshan NPG project is expected to be put into operation in '18. We believe that the company's gross margin is expected to rebound. Downstream environmentally friendly powder coatings are still a slump in application, and demand for polyester resins will continue to grow. The global environmentally friendly powder coating market volume in 2015 was 8.71 billion US dollars, and the market forecast is an average annual compound growth rate of 7.6%. China currently occupies half of the market, but it is mainly used for exports. As countries and consumers pay attention to environmentally friendly materials, on the one hand, the share of powder coatings will increase. On the other hand, the application fields of powder coatings will expand to electronics, automobiles, furniture, etc., and the demand for polyester resin will maintain a certain growth rate. The company is a leading domestic polyester resin company for powder coatings. Currently, its market share is about 27%, ranking first in the industry. We are optimistic that the company, as a leading enterprise, will achieve high growth in an industry with a low growth rate. The acquisition of Jiaye Airlines and Zhongxing Weiye was completed, and the military sector expanded in an orderly manner. Following the acquisition of Jiaye Airlines, Jiaye Airlines completed the acquisition of 60% of Zhongxing Weiye's shares with its own capital. Zhongxing Weiye has complete military quality and a high technical threshold, and the Beidou series products have a strong competitive advantage in the industry in which it is located. Jiaye Airlines promised to deduct non-return net profit of not less than 31.5 million, 41 million, and 51 million in 15-17. It has exceeded its performance commitments in 2015 and 2016, and is expected to complete its performance promises in 2017. Through the acquisition of Jiaye Airlines and Zhongxing Weiye, the company quickly entered the fields of high-end aerospace equipment manufacturing and rail transit high-end equipment manufacturing with a large market space and a higher level of profitability. Currently, its main customers include AVIC Aircraft, China Aerospace Science and Technology Group, and CRRC. Profit forecast and investment recommendations: Net profit of $1.34/1.80/238 million yuan is expected to be achieved in 2017-2019. The corresponding EPS is 0.16/0.21/0.28 yuan/share, which is rated as an increase in holdings. Risk warning: New production capacity was not released in a timely manner; the country's oil prices fluctuated, and the company's gross margin declined; and the development of Jiaye Airlines fell short of expectations.