The 2017 results were in line with expectations and continued to be high in the first quarter: the company announced its 2018 semi-annual report, achieving total operating income of 2.778 billion yuan, a year-on-year decrease of 1.19%; realized net profit of 327 million yuan, a year-on-year decrease of 17.45%; achieved net operating cash flow of 471 million yuan, a year-on-year decrease of 6.27%, and achieved EPS of 0.261 yuan during the reporting period. The Q2 Company achieved revenue of 1.499 billion yuan, an increase of 2.95% over the previous month, and achieved net profit of 209 million yuan to mother, an increase of 77.11% over the previous month. Gross margin decreased slightly year-on-year during the reporting period; rates rose slightly year-on-year during the period: the main reason for the year-on-year decline in the company's performance was the decline in profits due to fierce market competition, while expenses and asset impairment increased year-on-year during the period. Gross profit from chemicals, an important main business, decreased 9.54% year on year; during the reporting period (first half of the year), the company's comprehensive gross profit margin was 31.1%, down 1.65 percentage points year on year; sales rate was 1.84%, up 0.04 percentage points year on year; management rate and finance rate were 11.69% and 2.68%, respectively, up 0.26 percentage points and 0.37 percentage points year on year, respectively, and the period rate was 16.21%, up 0.67 percentage points year on year. Asset impairment losses amounted to 45.93 million yuan, an increase of 177.2% over the same period. Looking at subsidiary companies, the net profit of Nanjing Chengzhi Clean Energy (chemical gas and liquid products) also increased by 3.49% to 426 million yuan, the net profit of Chengzhi Yonghua (liquid crystal display materials) decreased by 52.1% year on year to 38.26 million yuan, and losses from Baolong Environmental Protection and Anhui increased year on year. Phase II MTO and Nishinakajima projects continue to advance, and are optimistic about the performance of medium and high oil price coal chemical projects: after the company signed the “Investment Framework Agreement for Industrial Gas Project Co-production Methanol to Olefin Projects” with the Nishinakajima Petrochemical Industrial Park Management Committee and Air Chemical at the end of 2015, they continued to investigate the process, market and pricing and communicate with potential customers, and the project is still in progress. The subsidiary Nanjing Chengzhi has completed the preliminary design of the 600,000 tons/year MTO project and completed all the land use procedures for the project. The safety pre-assessment has been completed, the EIA has entered the approval stage, the construction of the pile foundation, tank foundation and pipe gallery steel joints has been completed, and the project progress at the end of the reporting period was 22.39% complete. International oil prices have continued to rebound since 2016 to the current oil price stage of 60-80 US dollars/barrel. Further breakthroughs are expected in the later stages due to geopolitical risks. The company's second-phase MTO and Nishinakajima projects continue to advance. They are optimistic about the increase in MTO profits during the high oil price stage and the successful replication of the Nanjing Chengzhi Gas platform in Nishinakajima in the future. Maintaining the “gain” rating: Considering factors such as the impact of high raw material prices on production costs, the company lowered its 2018 to 2019 and added a profit forecast for 2020. The estimated net profit is 767, 8.69, and 881 million yuan, respectively, equivalent to EPS of 0.61, 0.69, and 0.70 yuan, respectively, maintaining the “gain” rating. Risk warning: Prices of raw materials have risen, and new projects have not progressed as expected.