Major events: The company announced its 2017 three-quarter report to achieve operating income of 1,144 billion yuan, a year-on-year increase of 29.74%, and net profit of 358 million yuan, a year-on-year increase of 58.89%. On a quarterly basis, the company achieved operating income of 339/3.64/442 million yuan in a single quarter in Q1/Q2/Q3, and realized net profit of 1.5/0.89/1.2 billion yuan, Q3 revenue increased 26.3% year-on-year, 21.43% month-on-month, and net profit increased 148% year-on-year and 34.83% month-on-month. At the same time, the company predicts that the annual performance growth range will be 50% to 80%, that is, the net profit performance range for 2017 will be 333-399 million yuan. 1. Beneficiaries of economic recovery and highway overrun, the relationship between supply and demand in the passenger rolling business is good, and the performance is growing steadily. The company has passenger transport qualifications for the Yantai-Dalian route and the Penglai-Lushun route. It is the largest passenger transport enterprise with the strongest comprehensive transportation capacity in China. The revenue from the passenger transportation business comes from the freight of vehicles and passengers, of which vehicle freight revenue accounts for about 60% of the total revenue of the route. 1) On the supply side, the Bohai Bay region has stopped approving new passenger transport companies, will not add new capacity, and the supply of capacity will remain stable. 2) Looking at the demand side, a) The advantages of the company's passenger transportation business were highlighted in the context of highway overhaulage, bringing in more truck traffic, b) the acceleration of national strategies such as the recovery of China's economy and revitalization of old industrial bases in Northeast China. Demand in the Bohai Bay passenger transportation market is rising steadily, the total number of vehicles crossing the sea has increased, and vehicle freight rates are stable. 2. Benefiting from the appreciation of RMB, financial expenses contributed significantly to the company's financial expenses during the reporting period: -14.09 million yuan, compared to 29.71 million yuan in the same period last year, a decrease of 147% over the same period last year, with a difference of 43.8 million yuan. When we analyzed the target of RMB appreciation, we had previously calculated that Bohai Cruises Co., Ltd.'s dollar loan, according to the company's 2016 annual report, the RMB fluctuated by 1 percentage point against the US dollar, which affected the net profit of 5.88 million yuan. As of the end of the third quarter, the RMB had appreciated 4.3% against the US dollar. According to this estimate, exchange earnings were about 25 million yuan. (Exchange losses of 25 million yuan for the full year of 2016) 3. Continue to develop the cruise industry, actively build international passenger and cargo businesses, and find new growth points 1) The cruise business is an emerging industry actively deployed by the company. Although the company's cruise business is currently not profitable, its development prospects are broad. The company has set up a cruise cultural industry fund and may seek new collaborative growth points in the cruise industry chain in the future. 2) Deploy international passenger traffic and expand the company's industrial advantages. The company's newly built international passenger roller carrier has been put into operation, increasing the capacity level of the company's passenger rolling business. By strengthening the organization of passenger sources, the actual passenger load rate will be increased; at the same time, by exploiting the advantages of fast shipping routes, accurate flight schedules, and convenient customs clearance, we will continue to tap market potential and strive to increase new supply sources. 3) Since February, the company has invested in the “Pearl of the Bohai Sea” ship to carry out cargo transportation business. As a supplement to the passenger transportation business, the revenue comes from the freight of vehicles and commercial vehicles. 4. The company concerned about promoting the reform of state-owned enterprises received the “Notice on Launching a Pilot Employee Shareholding” issued by the Liaoning Provincial State-owned Assets Administration Commission in July, requiring selected enterprises to complete their shareholding plans by the end of 2017 in accordance with the requirements of the pilot policy. The development of employee shareholding is conducive to further optimizing the company's equity structure and improving the corporate governance mechanism, stimulating the initiative and creativity of core key employees, achieving long-term unification of employees' interests with the company's long-term interests, and promoting the sustainable and healthy development of the company. 5. Investment suggestions: The target of undervaluation is based on the future progress of state-owned enterprise reform, maintaining the “recommended” rating company as the leading passenger transport enterprise in the Bohai Rim region. The main business is expected to continue to grow steadily under continuous improvement in the supply and demand environment. At the same time, the company is also deeply laying out a number of new businesses to find new performance contribution points. In the future, with the further development of employee shareholding, the company's development is expected to usher in further reform dividends. The company's net profit for 17/18/19 is estimated to be 388/4.29/464 million yuan, respectively, and 14/13/12 for PE, respectively, maintaining the “recommended” rating. Risk warning: the risk of safe maritime transportation, the risk of the company's future business development and market development.