The 1Q18 results were in line with expectations, and Dier Hanyu announced 1Q18 results: operating income of 180 million yuan, up 2.2% year on year; net profit attributable to parent company was 24.31 million yuan, down 42.6% year on year. The company previously issued a performance forecast, which is in line with expectations. The appreciation of the RMB against the US dollar had a major negative impact. In 1Q18, financial expenses reached 10.12 million yuan. Excluding the impact of financial expenses, operating profit fell 14% year on year. The company's business is mainly export and is the world's leading drain pump for washing machines. The appreciation of the RMB against the US dollar led to a decline in the gross margin of the company's settlement export business. The 1Q18 composite gross margin fell 7.2 pct year on year and 1.6 pct month on month, which had a significant impact. Due to the company's unique technical advantages, it enjoyed the excess profits brought by drain pump technology for a long time in the past, and its gross margin and profit margin were clearly high. In the cycle of rising raw material costs and the appreciation of the RMB against the US dollar, the ability to raise prices is weak. Customers believe that the company has enough margin and that there is no need to raise prices. As a result, the profitability of the company's export business declined significantly. The company's unique dishwasher washing circulation pump has already entered the supply chain of Whirlpool and Fongtai, but it has been slow to successfully enter other dishwasher leaders, and the accessories business has not been expanded. The company's new energy vehicle parts are in the sample delivery stage, and future customer orders are uncertain. Spa toilets continue to be marketed according to the original method. Market education costs are high, and sales cannot be increased. The development trend in 2017-2018 against the backdrop of RMB appreciation and rising raw material prices is not conducive to the company maintaining a high profit margin. If the company's new business fails to open up the situation, subsequent growth will be slow. The profit forecast remains unchanged at the 2018/19 profit forecast of 0.43/0.48 yuan. The valuation and recommendations maintain a neutral rating. The target price is 12.8 yuan, corresponding to 30/27 times P/E in 2018/19. There is a 4% margin compared to the current stock price. The current stock price corresponds to 29/26 times P/E in 2018/19. Risk Exchange rate fluctuation risk; new business development risk.