Investment matters:

The company announced its three-quarter 2017 report: operating income in the first three quarters was 683 million yuan, an increase of 247.32% over the same period last year, and net profit was 588.271 billion yuan, an increase of 259.16% over the same period last year. The operating income in the third quarter was 242 million yuan, up 182.54% from the same period last year, and the net profit was 22.3256 million yuan, up 2008.47% from the same period last year. The company expects more growth in 2017 compared with the same period last year.

With the rapid growth of the industry, the company's performance has increased significantly. During the reporting period, the company's performance increased significantly, mainly based on the rapid growth of the security business line. As a high-quality local security construction enterprise, the company will continue to benefit from the continuous outbreak of the security industry in Xinjiang. In terms of traditional communication services, based on the current closure of 4G services in Xinjiang, it has a negative impact on communication services and is expected to maintain stability. In the future, with the country's strong investment in infrastructure in Xinjiang and the continuous landing of the project, the communication business is expected to grow.

During the period of strict cost control, continue to improve the speed of the project. In the first three quarters, the company's expenses during the period were 48.9752 million yuan, an increase of 72.68% over the same period last year, much lower than the revenue growth rate. Of this total, the management cost was 35.2187 million yuan, an increase of 47.18% over the same period last year, mainly due to the increased investment in research and development of new business in the current period, while the sales cost was 13.0692 million yuan, an increase of 195.46% over the same period last year. It is mainly due to the increase in upfront expenses caused by the increase in business volume and the increase in the performance salary of sales staff. The company has accelerated the progress of the project, and at present, various projects are progressing smoothly, including Kashgar 322 million project and Shule 80 million and other large projects, which have entered the final acceptance stage of the project.

There are plenty of orders on hand, and the performance for the whole year continues to be good. At present, the company is expected to have more than 1 billion orders on hand and is in good shape. at the same time, the company is constantly tracking new project orders to make reserves for the future. Based on abundant orders on hand, it is expected that the company's annual performance will continue to grow at a high speed.

Investment advice: the company is expected to maintain a "buy" rating of RMB 2017 EPS0.81/1.38/2.30, corresponding to PE40.22/23.74/14.25 times in 2018 and 2019.

Risk Tip: policy change risk, order quarterly fluctuation.