Investment highlights: Incident: The company released its report for the first half of 2018. In the first half of 2018, the company achieved operating income of 527 million yuan, an increase of 19.76% over the previous year; net profit attributable to shareholders of the parent company was 81.778 million yuan, an increase of 18.17% over the previous year. Earnings improved markedly in the second quarter, and factors suppressing exchange rates weakened. The company achieved revenue of 291 million yuan in the second quarter, an increase of 24.23% over the previous year, and achieved net profit of 53.455 million yuan to mother, an increase of 84.56% over the previous year. The company's gross profit margin for the second quarter was 27.38% (30.52% in the first quarter), the net profit margin was 18.38% (11.97% in the first quarter), and profitability improved significantly. Since the company's export business accounts for a relatively high share (accounting for 62.26% of overseas revenue in 2017) and is mostly settled in US dollars, exchange rate fluctuations will affect the company's performance to a certain extent. Affected by the recent devaluation of the RMB, the company's financial expenses for the first half of the year were -14.1 million yuan, compared to 2.9875 million yuan in the same period last year. The pressure on financial expenses was drastically reduced, driving the company's operating performance to continue to improve. Downstream demand continues to improve, and the preparation of products and raw materials has increased dramatically. The company collected 178 million yuan in advance in the first half of the year. The scale has declined somewhat, but it is still at a high level in recent years. The company's inventory reached 537 million yuan in the first half of the year, an increase of 34.16% over the previous year. Of this, raw materials reached 317 million yuan (balance at the beginning of the period was 188 million yuan), and 116 million yuan in products (balance at the beginning of the period was 51.09 million yuan). In the first half of the year, the company continued to maintain major customer relationships and develop business. Breakthroughs were made in the promotion of new products such as cold storage refrigeration equipment and complete cold storage projects, and business performance grew steadily. The tank container market is picking up, and the world's largest rental companies purchased more containers than in previous years. During the reporting period, the company added batch orders from customers such as Raffles, Taifu Leasing, and Haite Leasing. Fund-raising projects have been put into operation one after another to support future performance growth. After more than a year of infrastructure, equipment installation and commissioning, the company's tank container production expansion project was officially put into operation on May 19. After the expansion, the actual production capacity of the company's tank containers will exceed 10,000 units/year. At the same time, the company's cold chain equipment production expansion project is progressing in an intense and orderly manner. The process layout and main equipment order have been completed, and the plant construction is expected to be completed by the end of the year. The successive commissioning of fund-raising projects will help ease the company's production capacity bottlenecks, further consolidate the company's position in the tank container and quick-freezing equipment industry, and provide support for the company's future performance growth. Profit forecast and investment rating: We expect the company to achieve operating income of 1,281 billion yuan, 1,598 billion yuan and 1,988 billion yuan respectively; net profit to mother of 213 million yuan, 288 million yuan and 350 million yuan respectively; EPS of 1.01 yuan, 1.36 yuan and 1.66 yuan respectively, and corresponding PE of 18X, 13X and 11X respectively. The company was given a target price of 27.2 yuan for 6 months, maintaining the “Highly Recommended” rating. Risk warning: 1. The progress of production capacity release falls short of expectations; 2. The RMB exchange rate fluctuates greatly; 3. Trade protectionism continues to heat up.