Events: In January-September, the company achieved revenue of 3.8 billion yuan, a year-on-year increase of 2.37%; net profit attributable to shareholders of listed companies of 250 million yuan, a year-on-year decrease of 7.51%; non-net profit attributable to shareholders of listed companies of 244 million yuan, a year-on-year decrease of 5.87%; and basic earnings per share of 0.08 yuan. The company expects to achieve net profit of 360 million yuan to 480 million yuan for the whole year, an increase of -19.30% -7.61% over the previous year. Investment points: The revenue side is clearly dragged down by air conditioning international, and the performance performance is lower than expected for the company to achieve revenue of 1.11 billion yuan in Q3, -11.5%/-14.6% over the same period; lower than the overall performance of the industry (Q3 domestic passenger car production +3.04%/+8.74% over the same period; Q3 sales volume of independent brand passenger cars in the company's main customer group +3.23%/+8.79% over the same period). The decline on the revenue side is expected to be mainly dragged down by the international performance of air conditioning (some supporting models in North America stopped production). In Q3, the company achieved net profit of 65.765 million yuan, a year-on-year decrease of 28.9%; realized net profit after deduction of 63.308 million yuan, a year-on-year decrease of 22.1%, and performance fell short of expectations. On the one hand, performance on the performance side was affected by the revenue side, and on the other hand, it was hampered by declining profitability. The degree of decline in profitability has exceeded expectations. The company's gross margin has continued to decline since this year due to factors such as the rise in the price of raw aluminum, changes in product structure (the increase in the share of Fortis's revenue, which has a low gross margin), and the decline in capacity utilization (the company's production capacity continues to increase, exceeding the growth rate of the automobile industry). The gross profit margin for the Q3 quarter was 18.88%, down 4.6 and 2.4 percentage points from the same month on month; net profit margin was 5.85%, down 1.5 and 1.2 percentage points from the same month on month, respectively. The decline in overall profitability exceeded our previous judgment. The company has good control over the three expenses. The three cost rates for the Q3 quarter decreased by 1.89 and 0.29 percentage points, respectively, compared with the same period last month. Fluctuations in short-term performance do not hinder the company's long-term development. Although the company's short-term performance is hampered by the above factors, we are still optimistic about the company's long-term development. As a leading domestic automobile air conditioning compressor, the company is expected to enter the supply chain of more international automakers in the traditional field, with high-quality international air conditioning customer resources. In the field of new energy vehicles, relying on years of accumulation in the field of scroll compressors, the product competitiveness is strong, and it will continue to benefit from the growth of NEV production and sales in the future, and the company's active development of NEV thermal management products will also open up new growth space for the company. Maintaining the “recommended” rating. Considering that the company's profitability declined beyond our expectations, we lowered the company's EPS from 2017 to 2019 to 0.13, 0.15, and 0.18 yuan. The price-earnings ratio was 34 times, 30 times, and 24 times, respectively, to maintain the “recommended” rating.