2018H1 revenue increased 25% and performance increased 238%. The company released the 2018 semi-annual report. From January to June 2018, it achieved operating income of 593 million yuan, an increase of 25.15% over the previous year; net profit of 28.67 million yuan, an increase of 238.2% over the previous year; and net profit after deduction of 28.5 million yuan, an increase of 268.3% over the previous year. 1) Vehicle electrical equipment achieved revenue of 298 million yuan, up 8.65% year on year; gross profit margin was 21.76%, down 7.36 pct year on year. The main reason for the decline in gross margin was: due to cyclical effects of the industry environment, changes in the company's product revenue structure, and the share of revenue from products with higher gross profit declined. Among them, Guangzhou Dinghan (formerly CRRC Air Conditioning), the main subsidiary, achieved operating income of 194 million yuan and net profit of 2.48 million yuan. The number of new orders received increased by more than 70% over the same period last year. SMA RT achieved operating income of 76.3 million yuan and net profit of 12.12 million yuan. Wuhu Dinghan (formerly Haixing Cable) achieved operating income of 52 million yuan and net profit of 8.45 million yuan. 2) Ground electrical equipment achieved revenue of 190 million yuan, up 2.20% year on year; gross profit margin was 39.91%, up 0.66 pct year on year. Continuously improving product quality and technology leadership, new orders for terrestrial power supplies increased by 48.12% year-on-year in the first half of 2018. 3) Informatization and safety monitoring achieved revenue of 101 million yuan, a year-on-year increase of 785%; gross profit margin of 34.69%. Among them, Qihui Electronics achieved operating income of 98.49 million yuan and net profit of 11.37 million yuan. The main reason for the increase in performance: Qihui Electronics, asset impairment returned 1) and Qihui Electronics increased performance; after deducting Qihui Electronics, the company achieved revenue of 495 million yuan, an increase of 4.3% over the previous year. 2) Continuously strengthen accounts receivable management. Asset impairment losses recovered to 59.82 million yuan, compared to 7.67 million yuan for the same period last year. There was a sharp increase in new orders received, and guarantee performance continued to rise. 2018H1 companies received new orders of 950 million yuan, an increase of 41.06% over the previous year; pending orders of 2.25 billion yuan, an increase of 36.39% over the previous year; and guarantee performance continued to improve. Positioning as a “world-class rail transit equipment supplier”, the layout of the four major business systems is becoming more and more perfect. The company is positioned as a “world-class rail transit high-end equipment supplier”. The strategy focuses on the rail transit field. The layout of the four major business systems of ground electrical equipment solutions, vehicle electrical equipment solutions, informatization and safety inspection solutions, and after-sales maintenance and operation and maintenance solutions is improving, and maintaining technological leadership and continuous expansion of new products. The company began actively exploring the path of internationalization in 2014. In March 2017, it acquired 100% of the shares of SMA RT through Hong Kong Dinghan, taking the first step in internationalization. 2018H1 successfully won bids for more than 170 million overseas subway projects, laying a good foundation for the company to seize the strategic opportunity of “going global” with high-end rail transit equipment and achieve an international layout. Investment advice: The margin of safety is high; a sharp increase in orders ensures continuous improvement in performance. The company adjusts management, which is conducive to management sorting and business integration. The fourth phase of equity incentives was introduced, with an exercise price of $12.34 per share; the 3-year fixed increase has been completed, and the issue price is $14.91 per share. Benefiting from the increase in the prosperity of the rail transit industry, the company's new winning bid orders increased significantly over the same period last year, ensuring continued improvement in performance. The company's 2018-2020 performance is expected to be 180 million, 250 million yuan, and 300 million yuan, corresponding to PE 26/18/15 times, maintaining the “increased holdings” rating. Risk warning: the integration of mergers and acquisitions targets falls short of expectations, risk of falling railway investment; new products fall short of expectations