Event: The company released its 2018 semi-annual report on the evening of August 27, 2018: During the reporting period, the company achieved revenue of 11.016,500 yuan, an increase of 7.40% over the previous year, net profit attributable to shareholders of listed companies of 10.2516 million yuan, an increase of 23.66% over the previous year, and realized net profit attributable to shareholders of listed companies of 5.41441 million yuan, a year-on-year decrease of 15.30%. In this regard, our comments are as follows: Key investment points: Net profit increased by 23.66%, in line with expectations. Increased market development had an impact on performance in the first half of the year. The company achieved revenue of 11.016,500 yuan, an increase of 7.40% over the previous year, and realized net profit attributable to shareholders of listed companies of 10.2516 million yuan, an increase of 23.66% over the previous year. It is at the upper limit of the performance forecast, in line with market expectations. The net profit attributable after deductions was 5.414,100 million yuan, a decrease of 15.30% over the same period last year, mainly due to the company's increased brand promotion and market development efforts, which led to an increase in expenses. By business, membrane materials and accessories (gross profit ratio 34.98%, —18.42 pct) achieved revenue of 42.84 million yuan, a year-on-year increase of 69.23%, while overall membrane integration technology solutions and complete equipment (gross profit ratio 39.84%, +3.62 pct) achieved revenue of 66.2685 million yuan, a year-on-year decrease of 13.06%, mainly because the company's Minmetals Salt Lake lithium extraction project did not confirm revenue in the first half of the year. Affected by the decline in gross margin of membrane materials and accessories, the company's comprehensive gross margin was 38.26%, down 2.60 pct year on year. In terms of period expenses, sales/management/finance expenses were 1173.42/2164.81/39,000 yuan respectively, up 12.37%/12.72%/105.61% year on year. Market development efforts have been stepped up, and orders have increased. The salt lake lithium extraction company focuses on the development and application of membrane separation technology with ceramic membranes as the core, and uses this as a basis to provide systematic integrated membrane technology solutions for the fields of process separation and special water treatment. The company's ceramic film accounts for more than 40% of the domestic market and is a leading enterprise in the industry. The company continues to promote the development and promotion of ceramic film technology applications to provide technical support for future business development in various application fields. At the same time, market development efforts have been continuously strengthened, and orders have increased or broken through in fields such as industrial wastewater, biomedicine, chlor-alkali chemicals, and salt lake lithium extraction. In particular, the complete magnesium-lithium separation device for the 10,000-ton lithium carbonate project signed with Minmetals Salt Lake shows that the company's membrane lithium extraction technology has been recognized by customers. The contract amount for the project is 265.56 million yuan, which is 90.47% of the company's 2017 revenue. On the one hand, it can significantly increase the company's performance. Furthermore, this project is the company's first salt lake lithium extraction project. At a time when market opportunities for the salt lake lithium extraction materials and equipment industry are approaching, the company is expected to obtain more projects based on project experience advantages, and the salt lake lithium extraction has points of interest. In addition, the company acquired 51% of Tianhong Oasis's shares (mainly engaged in front-end treatment of industrial wastewater, treatment of black and smelly water bodies, etc.) to improve the company's industrial water treatment industry chain. In the context of stricter environmental protection inspections, the industrial water treatment market will recover, and the company will fully benefit. Profit forecast and investment rating: Maintaining the company's “overweight” rating. The company's 2018-2020 EPS is expected to be 0.75, 0.92, and 1.11 yuan respectively, corresponding to the current stock price PE of 25, 21, and 17 times. We are optimistic about the application of the company's ceramic membrane technology to lithium extraction in Salt Lake and the performance elasticity brought about by the new orders. Maintain the company's “increase in holdings” rating. Risk warning: the risk that downstream demand falls short of expectations, the risk that the salt lake lithium extraction business is progressing slowly, the risk of uncertainty in the industrial application of the company's membrane lithium extraction, and the downside risk of the macroeconomy.