Report Guide The company released its report for the third quarter of 2017 on the evening of October 26. Investment points The revenue growth rate for the third quarter increased month-on-month, and the profit level declined slightly. The company achieved operating income of 572 million yuan in the first three quarters, up 2.20% year on year, of which 199 million yuan in the third quarter, up 8.57% year on year; net profit attributable to shareholders of listed companies in the first three quarters was 134 million yuan, down 14.11% year on year, of which 38 million yuan was achieved in the third quarter, down 24.76% year on year, and earnings per share of 0.40 yuan in the first three quarters. The revenue growth rate for the third quarter increased month-on-month, and the profit level declined slightly. The traditional business is growing steadily, and the company's pump products have maintained steady growth in the new business. At the same time, the company continues to optimize the product structure, maintain products with high gross profit, replace new high-efficiency integrated pumps with lower gross profit products, and include this part in the drain pump. In the future, it is more reasonable to combine general and special drainage pumps. We believe that the company's drain pump products will maintain steady growth, benefiting from the rapid growth in domestic drum washing machine production and sales volume, as well as the high brand recognition of overseas Dirhanyu pumps. The company's dishwasher washing pump business has benefited from the rapid rise of the domestic dishwasher industry, and is expected to achieve rapid release in the future. The company's spa toilet business continues to advance, the development of channels such as five-star hotels, hospitals, beauty salons, and nursing homes has accelerated, and the business volume continues to expand. The company's spa toilets are positioned as high-end, and the added value of the products is high, and is gradually becoming a new growth point for the company's performance. Gross margin rose slightly in the first three quarters, and net profit margin fell under pressure. The company's overall gross sales margin for the first three quarters increased 0.37 percentage points to 41.78% year on year. Among them, gross margin for the third quarter fell 2.38 percentage points to 40.25% year on year, mainly due to rising raw material prices. Prepaid accounts increased 84% year on year, mainly because the company locked prices for commodities in response to changes in market conditions. The company's net sales interest rate for the first three quarters fell 4.14 percentage points year on year to 23.18% year on year. Among them, net interest rate for the third quarter fell 8.27 percentage points to 18.37% year on year. Mainly, the financial expenses ratio increased 5.39 percentage points to 0.67% year on year due to exchange losses. Actively expand into new fields and maintain the “buy” rating. Currently, the company's three-sector layout of “big health+intelligent manufacturing+new energy” is becoming more clear, and the revenue scale and profitability will be further enhanced. We expect the company's net profit for 2017-2019 to be 171 million yuan, 201 million yuan and 234 million yuan, with year-on-year changes of -10.9%, +18.0% and +16.4%, corresponding to EPS of 0.51 yuan, 0.60 yuan and 0.70 yuan. The current stock price corresponding to 2017-19 PE is 32.5 times, 27.6 times and 23.7 times, maintaining the “buy” rating.