Key investment results: The annual report is in line with expectations, and it is expected that 18H1 will continue to grow. In 2017, it achieved revenue of 2.47 billion yuan, +104.1% year over year; realized net profit of 1.01 billion yuan, +158.5% year over year; realized net profit without deduction of 1.01 billion yuan, +192.4% year on year. The annual report is in line with expectations. When the company went public in 2015, it promised to achieve a cumulative net profit of 1.39 billion yuan after deducting non-return to mother from 2015 to 2017, and the promise has now been fulfilled. In 18Q1, we achieved revenue of 460 million yuan, +7.6% year over year; realized net profit of 180 million yuan, +13.7% year over year; realized net profit without deduction of 150 million yuan, -6.1% year on year. At the same time, the company predicts 18H1 net profit to be 50 to 60 billion yuan, +17.4% to +40.9% year-on-year. Business: The product line extension logic has been verified once again, contributing to high performance growth. The sharp increase in performance in 2017 was mainly driven by the nuclear power business. Main pipes/other nuclear power equipment/nuclear grade materials achieved revenue of 5.7/21/2.8 billion yuan, +268.2%/332.5%/-28.2% year-on-year. The growth was due to enhanced product competitiveness and industry recovery. We mentioned in our previous report that based on the advantages of high temperature alloy forgings, the company's product line can be extended very well. In 2017, the new business container equipment and forgings achieved revenue of 80 billion yuan, accounting for 43.1% of the nuclear power business revenue, and has become a major new profit point. At the same time, the increase in revenue from the nuclear power business brought about a scale effect, and the gross margin of the business rose sharply. In 2017, the gross margin of nuclear power equipment (excluding nuclear grade materials) was 78.1%, +52.7 pcts year-on-year. Industry: The first AP1000 unit was approved for loading, and the nuclear power equipment industry ushered in positive marginal changes. On April 25, the world's first AP1000 unit, Sanmen-1, obtained the “First Loading Approval” from the National Nuclear Safety Administration. This means that the world's first AP1000 nuclear power unit has met the loading requirements and will soon be put into operation. If Sanmen-1 is successfully commercialized, the AP1000 unit that is waiting in line, and the CAP1400 unit, which was domesticated based on the AP1000, are expected to be approved to start construction, and the country is also expected to usher in a new wave of nuclear power construction. In the future, based on the rate of construction of 6 to 8 new units per year, the annual nuclear power equipment market will be about 50 billion yuan. Furthermore, offshore nuclear power plants, which are expected to be built in batches in the future, will drive demand for nuclear power equipment. The parent company Taihai Group signed a cooperation agreement with China Nuclear Power and others on a comprehensive offshore clean energy supply platform at the beginning of the year. Outlook: 2018 results have the potential to explode. The main reason why the company's stock price has been undervalued for a long time is that both the nuclear power equipment industry and the special equipment industry are highly uncertain. However, from another perspective, with both major downstream industries sluggish, the company still more than doubled its growth in 2017, and received 3.65 billion orders in early 2018. If the sentiment of the nuclear power equipment and special equipment industry reverses in 2018, the company's performance has the potential to explode. The company moved frequently during the downturn in the industry. It plans to raise no more than 3.95 billion yuan in capital, continue to increase production capacity for nuclear power equipment and special equipment, and is ready to welcome the recovery of the industry. risk factors. The tender schedule fell short of expectations; product expansion was blocked; and the progress of the non-public offering fell short of expectations. Profit forecasting, valuation and investment ratings. According to the annual report data, we slightly adjusted the company's net profit forecast for 2018/19 to RMB 1,41/1.89 billion (the original forecast was RMB 1,42/1.94 billion), and added a net profit forecast of RMB 2.32 billion for 2020. The corresponding EPS is 1.36/1.82/2.23 yuan (considering that the number of additional shares issued is 20% of the original share capital), the corresponding PE is 20/15/12 times, and the 3-year CAGR exceeds 30%. Maintain the target price of 47.7 yuan, corresponding to 35 times PE in 2018, and maintain the “buy” rating.