Leading nuclear power equipment companies, the sharp increase in performance is in line with expectations. The company released a quick performance report. Revenue in 2017 was 2,526 billion yuan, up 108.7% year on year; net profit to mother was 1,043 billion yuan, up 166% year on year. Among them, revenue for the fourth quarter was 920 million yuan, up 66.1% month-on-month and 123% year-on-year; net profit to mother was 389 million yuan, up 69.87% month-on-month and 897% year-on-year. The company is a leading domestic nuclear power equipment company. In 2017, the company received new orders one after another in the traditional pressurized water reactor nuclear power equipment market, and signed supply contracts in the field of special materials, etc., and both orders and performance increased dramatically. Relying on its own technical advantages, the company is horizontally expanding fields such as offshore nuclear power equipment, special materials, metallurgy and petrochemicals, nuclear waste treatment, and nuclear power longevity. The market space continues to increase, and there is sufficient momentum for continuous growth. Large orders ensure future growth momentum. According to the announcement, in January 2018, the company signed a major contract with the parent company Taihai Group, with a contract amount of about 3.65 billion yuan, mainly selling products such as container forgings to the Taihai Group. It is expected that the execution period of the transaction will generate net profit of 200-600 million yuan each year, indicating that the company has substantially expanded in the non-nuclear market, enhanced the company's ability to resist industry risks and overall competitive strength, and provide sufficient impetus for the company's future performance. Offshore nuclear power is on the rise and is expected to be a highlight of the company's future performance. In August 2017, China Nuclear Power announced that five companies including Shanghai Electric will jointly invest 1 billion yuan to establish CNNC Offshore Nuclear Power Development Co., Ltd., whose main business is the development, construction, and operation of marine nuclear power equipment. In the civilian field, marine nuclear power equipment can provide reliable and stable electricity supply, heating, and seawater desalination in fields such as offshore oil and gas field mining, island development, etc., and can also provide propulsion power for icebreakers, and has strong economic and strategic significance. According to a report from Sohu.com, in the future, China will build nearly 20 offshore nuclear power plants on the islands and reefs of the South China Sea. It is estimated that each offshore nuclear power platform will invest about 2 billion yuan, and the total cost of 20 offshore nuclear power platforms will reach 40 billion yuan. Yantai, where the company is located, is the core city of the new and used kinetic energy conversion experimental zone in Shandong Province. It aims to build a 100 billion high-end equipment manufacturing industry cluster using offshore floating nuclear power plants as the lead (engine). As the only nuclear power main equipment manufacturer in Yantai, the company has natural geographical advantages and strong technical reserves, and is expected to benefit deeply from the development of offshore nuclear power. Onshore nuclear power is gradually getting out of trouble, and the company is expected to take orders for new equipment. Affected by various factors, China has not approved the construction of new nuclear power units for two consecutive years. As the benchmark unit, the AP1000's first three-door unit, enters the loading stage, onshore nuclear power may usher in a turning point. If nuclear power starts, the company is expected to receive subsequent orders for unit equipment. Investment advice: The company's revenue from 2017 to 2019 is estimated to be 2,526 billion yuan, 3.156 billion yuan, and 3,542 billion yuan respectively, with net profit of 1,018 billion yuan, 1,216 billion yuan, and 1,446 billion yuan respectively. Maintaining the buy-A investment rating, the target price for 6 months is 33.6 yuan, which is equivalent to a dynamic price-earnings ratio of 24 times that of 2018. Risk warning: Downstream demand falls short of expectations, and new business development falls short of expectations.