Incident: Sifang Cold Chain's revenue in 2017 was 1.09 billion yuan, up 49.26% year on year, and operating income reached a record high; net profit of 172 million yuan, up 38.36% year on year; net profit after deducting net profit of 162 million yuan, up 33.49% year on year; diluted earnings per share of 0.82 yuan/share, while also planning to pay a dividend of 1.8 yuan for every 10 shares. 2017Q4's revenue in a single quarter was 316 million, up 53.92% year on year; net profit to mother was 557.99 million, up 32.24% year on year; net profit after deducting non-return to mother was 489.07 million, up 18.56% year on year. The company is a “small but beautiful” company in the industry. The future will benefit from global economic recovery+domestic economic recovery and consumption upgrade. Short-term net profit pressure will be high due to exchange gains and losses. The net profit side is expected to be 240 million in 18 years, corresponding to a PE of 25.4 times, maintaining prudent recommendations! Comment: 1. Revenue slightly exceeded expectations, and both main businesses grew rapidly. The company's revenue in 2017 increased by 49.26% year on year, slightly exceeding expectations. 17Q1, Q2, Q3, and Q4 revenue growth rates were 33.4%, 59.73%, 49.04%, and 53.92%, respectively. It mainly benefits from the continued recovery of the global economy, while the company is actively expanding new fields and customers. The consolidated gross margin was 33.01%, up 1.12 percentage points year over year. By business, 1) The special container business produced by Sifang Tank Storage, a wholly-owned subsidiary of the company, had 17-year revenue of 667 million yuan, an increase of 56.17% over the previous year. The gross margin reached 29.06%, an increase of 2.09 percentage points over the previous year. The main source of product growth is driven by the recovery of the global economy and the domestic economy. Domestic sales are growing very fast, and there is a clear need for renewal in the stock market. Its products are mainly tank containers, which rank third in the world. China is second only to CIMC, and currently has a market share of 12%. The company has a higher proportion of non-standardized containers than CIMC, which has a certain competitive advantage. Container manufacturing costs have declined markedly due to rising gross margins. The company's containers originally outsourced outsourced components and were made in-house in '17, so gross margins have increased. 2) The parent company undertook the refrigeration equipment manufacturing business, with revenue of 314 million yuan in '17, an increase of 46.33% over the previous year. The increase exceeded expectations. The gross profit margin of 39.11% increased 1.58 percentage points year on year. The cold chain industry began in the second half of 2016, and the entire industry has been picking up. Apart from the original customers increasing purchases, it is mainly the expansion of new customers, especially customers in the central kitchen category. The increase in gross margin was mainly due to personnel consolidation after the acquisition of subsidiaries, so labor costs dropped significantly. 2. Equity incentives affect current profit and exchange profit and loss pressure clearly. The company's net profit due to the year-on-year increase of 32.24% year-on-year, which is slightly lower than revenue growth. The main reason is that the total equity incentive expenses for the current period amounted to 238.32 million (16.373 million + 7.459 million included in R&D expenses) and an increase of nearly 28 million in exchange profit and loss. 1) Sales expenses were 27.2923 million, up 10.16% year on year, reflecting the company's scale effect; 2) Management expenses were 102 million, an increase of 78.21% year on year. On the one hand, due to the current share incentive expenses of 16.373 million, while R&D expenses of 48.7 million (including 7.459 million equity incentive expenses for R&D personnel) increased 74.68% year on year. The increase in R&D expenses was mainly due to the company's continuous research and development in the container and quick-freezing equipment segment; 3) Financial expenses 8.826 million, an increase of 176.84% over the same period last year. The difference was nearly 20.3 million yuan, mainly because 57% of the company's operating income was international revenue, the amount of US dollars and US dollars receivable was large, and the RMB appreciated sharply against the US dollar throughout '17, which led to 21.434 million foreign exchange gains and losses in the current period. The exchange profit and loss for the same period last year was -6.453 million yuan, with a difference of 27.387 million yuan. 3. Granting restricted equity incentives to complete reservation 18Q1 Exchange gains and losses still hampered net profit. On February 9, '18, the company awarded 10 incentive reserved restricted shares, totaling 575,000 shares, at a price of 11.08 yuan/share. The 10 targets included company director Mr. Qian Hong, middle management personnel and core technical (business) personnel (including subsidiaries, 9 people in total). The corresponding administrative expenses increased by 2.454 million yuan in 2018. The company planned equity incentives at the beginning of 2017. On March 15, 356 people were granted shares, with 3.46 million shares at a price of 15.91 yuan, including 6 executives and 350 middle management and technical personnel. This year, it also completed restricted stock grants, binding the company's core senior management and technical personnel, which is beneficial to the company's long-term development. The company's two business segments have a clear competitive advantage in the segment. The market share for special containers is about 12%, ranking third in the world, and China is second only to CIMC; the market share of quick-freezing equipment exceeds 15%, and is increasing year by year. According to information, the company's production was quite substantial in the first quarter of '18, and revenue continued to grow, but the 2017 base was high, and the growth rate slowed down. The net profit side, on the other hand, was dragged down by the exchange rate, and the 2017Q1 exchange was a positive return, and the overall pressure was high. The company is a “small but beautiful” company in the industry. The future will benefit from global economic recovery+domestic economic recovery and consumption upgrade. Short-term net profit pressure will be high due to exchange gains and losses. The net profit side is expected to be 1.375 billion yuan and net profit of 240 million yuan in 2018, corresponding to PE 25.4 times, maintaining prudent recommendations. 4. Risk warning: RMB continues to depreciate, global economic recovery falls short of expectations, and raw materials continue to rise.