Performance Overview In the first three quarters of 2017, the company achieved operating income of 9.015 billion yuan, an increase of 814% over the previous year, and net profit attributable to shareholders of listed companies of 206 million yuan, an increase of 469% over the previous year; the estimated profit for the whole year was 270 million to 350 million yuan, a significant increase over the previous year. Business analysis led to a significant increase in performance due to the merger of China Machinery and Electric Power. The company's revenue and profit increased sharply in the first three quarters. The main reason is that in December last year, the company completed the acquisition of 80% of China Machinery Electric Power's shares, and China Machinery Electric Power's performance was included in the scope of the consolidated report, which led to a significant increase in overall performance. The company's business was mainly “heavy equipment manufacturing” and changed to the dual main business of “power engineering general contracting+heavy equipment manufacturing”. Power engineering general contracting became the company's main business, accounting for more than 82% of revenue. The company's asset structure and operating characteristics changed accordingly, and the order scale expanded rapidly. In the first half of the year, it undertook more than 15 billion yuan in general contract contracts. The centralized commencement of projects increased procurement and payment of various security deposits, resulting in a 431% year-on-year decrease in net cash flow from operating activities. Overall, the company's acquisition integration progressed steadily, and its operating performance increased significantly compared to the same period last year. Profitability increased markedly. Profit for the full year of 2017 is expected to be 270 million to 350 million yuan, a significant increase over the previous year. There are plenty of orders in hand for power engineering, and the growth momentum is strong. The company's total order volume increased dramatically. At the end of the reporting period, it received 1.5 billion yuan in advance payments for various EPC general contract projects, an increase of 121% over the previous year. As of June 30, 2017, the company had orders in hand totaling 18.344 billion yuan, of which the power engineering and clean energy engineering business had ongoing orders of 16.147 billion yuan, accounting for 88%. While expanding the domestic market, China Machinery Power is actively seizing the international market, promoting large-scale energy projects represented by Jiangsu Delong Nickel Indonesia Phase II Project 12×135MW Self-Owned Power Plant and Hengyi Industrial Co., Ltd.'s Brunei PMB coal-fired power plant project, and participating in the construction of power and energy projects in countries in the “Belt and Road” region. Seize opportunities in the photothermal power generation market or become a new profit growth point. In March of this year, China Machinery Power won the bid for the “Yumen Zhengjiashawo Molten Salt Tower EPC General Contract Power Project” with a bid amount of 1,613 billion yuan and a construction period of 19 months. The company plans to use Yumen Xinneng Photothermal First Electric Power Co., Ltd. as the implementing entity, and plans to raise no more than 1,572 billion yuan in non-public funding for the construction of the project. Feedback has already been submitted to the Securities Regulatory Commission, and the project is progressing normally. The Yumen photothermal power generation project is one of the first 20 photothermal demonstration projects of the National Energy Administration. It enjoys a preferential benchmark feed-in tariff of 1.15 yuan per kilowatt-hour. The electricity generated is guaranteed and purchased by the power grid. After completion, the project can contribute considerable profits and cash flow to the company every year, becoming a new growth point for the company's performance. Profit forecast We forecast that the company's 2017-2019 revenue was 134/157/18 billion yuan, up 1023%/17%/15% year on year respectively; net profit was 3.5/4.3/5.1 billion yuan, up 167%/23%/19% year on year respectively; EPS was 0.47/0.58/0.69 yuan, corresponding PE was 20/17/14 times, respectively. Investment recommendations We believe that the company's asset restructuring has been completed to promote integration, and China Machinery Power has contributed to its performance. There are sufficient orders in hand, traditional heavy equipment business is expected to recover, and the performance for the full year of '17 is expected to increase dramatically; the company plans to raise additional capital to implement photothermal power generation projects, bringing new profit growth points. Maintain the company's “buy” rating, with a target price of 14.0 yuan for 6 months. Risks indicate the risk of merger and acquisition business integration, the risk of a high balance ratio, and the risk of approval of a non-public offering plan.