The company released its three-quarter report on the evening of October 25. In the third quarter of 2017, the company achieved operating income of 29.61 million yuan, a year-on-year increase of 7.32%, net profit of 5.98 million yuan, a year-on-year increase of 77.12%. In the first three quarters of 2017, it achieved operating income of 114 million yuan, a decrease of 0.45% year-on-year, and net profit of 225.5 billion yuan, up 4.15% year-on-year. Core opinion: Product delivery has accelerated in a single quarter, and financial expenses have declined slightly. The company's revenue for the third quarter increased 7.32% year on year, higher than the growth rate of -2.91% in the semi-annual report. In the semi-annual report review, we expect the company's product delivery to resume in the second half of the year, and a steady increase in annual performance. This is already reflected in the third quarter in a single quarter; since military deliveries are mainly concentrated in the fourth quarter, it is recommended to focus on the company's product delivery in the fourth quarter. At the same time, since the company obtained high profits from using idle funds raised for financial purchases this year, the financial expenses for the first three quarters were -993,400 yuan, so the net profit growth rate was greater than the revenue growth rate. The electronization of aero engines is a development trend and is expected to become an important growth point for the company in the future. The market size of aero engine electronic systems in China is tens of billion yuan every year. The company's aero engine electronics products include aero engine data collectors and control systems. It is the largest supplier of helicopter engine parameter collectors in China. The engine electronic control system has completed pre-research project acceptance and has achieved revenue from professional technical services. Flight control computers have been mass-produced, and are expected to become an important growth point in the future. The aviation inertial navigation market is expected to usher in a new round of growth, and the company's product structure is continuously optimized. Inertial navigation has advantages such as good concealment and ability to work around the clock, but the price is high. With the explosion of market demand for civil aircraft, the advancement of inertial navigation technology, and the reduction in inertial sensor costs, the aviation inertial navigation market is expected to usher in a new round of growth. Chenxi Airlines has formed a comprehensive navigation system for various types of aircraft such as helicopters, transport aircraft, and drones. At the same time, it is expected to benefit from the rapid growth of the market by optimizing the product structure by increasing the proportion of high-end products such as laser quick links and inertial guidance. Profit forecast and investment advice: We expect the company's net profit in 2017-19 to be 5996/7056/81.73 million yuan, EPS is 0.66/0.78/0.90 yuan, and the current stock price corresponding to PE is 62/52/46 times, respectively. Considering the growth of the company's aeronautical inertial navigation, engine electronics and drone products, the company's “prudent increase in holdings” rating is maintained. Risk warning: The development progress of the engine electronic control system has not met expectations, and the delivery of military products has fallen short of expectations.