In the first quarter of 2018, the company achieved operating income of 361 million yuan, an increase of 6.67% over the previous year, net profit attributable to listed companies of 155 million yuan, an increase of 3.76% over the previous year, and net profit after deducting non-profit of 76 million yuan, an increase of 17.06% over the previous year. The rise in oil prices was mainly due to the decline in gross profit from the main business in the first quarter. The company's first-quarter revenue was 361 million yuan, up 6.67% year on year, operating cost was 259 million yuan, up 17.86% year on year, and achieved gross profit of 102 million yuan, down 14.2% year on year. Gross margin fell to 28.1% from 34.9% in the same period last year. We believe that the cost growth rate is significantly higher than the revenue growth rate mainly due to the year-on-year increase in oil prices. The average price of Brent crude oil in the first quarter was 66.9 US dollars/barrel, up 24.6% year on year, and the average spot price of marine oil (380 CST) in the first quarter increased 20.3% year on year. The 2017 annual report shows that the company's passenger transportation fuel costs accounted for 25.7%. We roughly estimate that the share of fuel in the first quarter rose to about 30%, and the cost increase caused by the rise in oil prices was about 13 million yuan. Exchange earnings contributed to the main increase in profit. The company's financial expenses for the first quarter were 29.76 million yuan, a year-on-year decrease of 32.46 million yuan, contributing to the main profit increase in the first quarter. The sharp reduction in financial expenses is mainly due to the sharp appreciation of the RMB and the increase in exchange earnings from loans between the US dollar and the Hong Kong dollar. As of the end of 2017, the company's US dollar loans totaled US$91.4 million and HKD loans totaled HK$295 million. The 1% appreciation of the RMB exchange rate against the US dollar and the Hong Kong dollar corresponds to the company's exchange earnings of about $5.8 million and $2.4 million, respectively. The amount of fuel subsidies is slightly lower. The company is expected to receive a total of 94 million yuan in fuel subsidies from the Yantai Finance Bureau in the first quarter. The same period last year was 107 million yuan, a decrease of about 12.5 million yuan over the same period last year. Fuel subsidies are generally paid in the first quarter of the current year. Considering that the overall oil price in 2017 was higher than in 2016, while the subsidy was lower than in 2016, we think the subsidy amount is slightly lower than expected. Profit forecast and investment advice: Considering the rise in oil prices and the slightly lower expectations for this year's subsidy amount, we lowered the company's 2018 EPS to 0.68 yuan. From a long-term perspective, the company's fuel subsidies over the years are clearly linked to oil prices, so we expect fuel subsidies in 2019 to rise significantly compared to 2018. At the same time, as the Northeast economy bottoms out and recovers, the company's passenger transportation business volume is expected to continue to grow. We forecast that the company's 2018-2020 EPS will be 0.68, 0.78, and 0.84 yuan/share, respectively, corresponding to the current stock price PE of 15.3, 13.3, and 12.3 times, respectively, giving it a “prudent increase in holdings” rating. Risk warning: economic growth in the Northeast region is slowing down; vehicle diversion due to loosening of highway overrun policies; sharp rise in oil prices; sharp depreciation of the exchange rate