The report explains that the company released its 2018 semi-annual report on August 22. In the first half of 2018, the company achieved operating income of 1.46 billion yuan, up 67.07% year on year, and net profit to mother of 41.73 million yuan, up 28.13% year on year. Key investment points The domestic steel structure business is currently the main development direction. Revenue continued to exceed expectations. The company's revenue scale exceeded expectations in the first half of 2018, and the number of orders continued to rise. In the first half of 2018, the company achieved operating income of 1.46 billion yuan, up 67.07% year on year. Among them, the company's steel structure business achieved significant growth, achieving revenue of 869 million yuan, an increase of 111.6% year on year. Among them, internal steel structure business revenue was 691 million yuan, an increase of 137.3% year on year. Judging from the differences, the domestic market has increased dramatically. The number of orders for the steel wheel business in foreign markets is sufficient, continuing to maintain a rapid growth trend, and the company's revenue side continues to improve. Net profit returned to mother in the first half of 2018 was 41.73 million yuan, up 28.13% year on year. Financial expenses were drastically reduced and profitability increased in the second quarter due to the depreciation of the RMB. The steel structure business is based on high-end steel structure manufacturing, and the stable position of the industry focuses on developing steel structure business with middle and high-end technical requirements. In overseas markets, the company continues to consolidate good cooperative relationships with international EPCs such as Fluor of the United States, Dechnib of France, Japan's JGC, Japan's Mitsubishi Hitachi, Italy's Technemont, US CB&I, Taiwan Zhongding, Sinopec SEG, and CNPC Global; in the domestic market, the company has outstanding performance in the fields of large-scale electronics industry plants, new energy vehicles, rail transit and large-scale public construction, and completed the Nanning International Convention and Exhibition Center and Chongqing Banan Stadium projects., In the first half of the year, the Guangzhou Foxconn panel project includes large-scale steel structure projects. In the first half of the year, the company also undertook projects such as Guangzhou Foxconn's steel structure project for the Corning Glass Project, the steel structure project for the Xi'an Samsung Electronics Project, the BYD Zoucheng, Anyang Cloud Rail Project, CRRC Liuzhou Cloud Rail Project, Xi'an Global Center, and Xiamen Software Park Phase III. At the same time, the steel grille factory invested and established by the subsidiary Zhangzhou Heavy Industries achieved mass production in the first half of the year, improving the integrated supply chain business for steel structure products, and improving the company's ability to accept orders and comprehensive supporting services for the steel structure business of equipment. In the future, as the domestic equipment steel structure market continues to expand, the company is expected to continue to gain strength with its technical advantages. Investment increased dramatically in the current phase. The Huaan wheel project progressed in an orderly manner. In 2017, the company began investing in the forged aluminum alloy wheel project. During the reporting period, the project completed plant construction, equipment commissioning and installation. In the first half of the year, product development, small-batch trial production, and testing and certification in target market countries were underway to achieve the goal of mass production of forged aluminum rings for commercial vehicles. At the same time, on the basis of mature process development and product testing for forged aluminum ring products for commercial vehicles, the company will gradually develop a new process for modified forged aluminum ring products for passenger cars, and bring the products to the market as quickly as possible. According to industry forecasts, the average growth rate of domestic aluminum alloy wheels will reach 50-80% in the next 3-5 years. Domestic buses and dangerous goods special vehicles are now equipped with a large number of forged aluminum wheels. As automotive wheel materials develop in the direction of lightweighting, resource saving, high performance and high functionality, the market prospects for new investment projects are broad. Smart wheels, booster wheel sales, and R&D have gradually reflected the company's active deployment of high-quality strategic projects in the automotive aftermarket and emerging IoT industries. A vertical wheel ecosystem platform combining TPMS, GPS, Beidou, ultrasonic fuel level sensors, RFID, laser tread detectors, etc. has been built and promoted, and a complete technical service system for various user solutions such as wheel manufacturers, dealers, stores, and fleets has been formed. At present, smart wheel 2.0 software and hardware products have begun to be applied, and a complete technical service system has been formed for various user solutions such as tire manufacturers, dealers, stores, fleets, and new ecological tire rental businesses. The company gradually expands the scale of software and hardware R&D and production, and continues to promote innovative technology research and development for smart wheels. Combined with a deep understanding of industry business, the company continues to iteratively upgrade industry solutions, and the advantages of industry barriers are gradually being reflected. Profit forecast and valuation We expect the company to achieve revenue of 26.80, 31.80, and 37.34 billion yuan in 2018-2020, with year-on-year increases of 34.63%, 18.64%, and 17.42%, achieving net profit attributable to the parent company of 0.883, 1.067, and 133 million yuan, with year-on-year increases of 30.20%, 20.78% and 24.96%; EPS for 2018-2020 is 0.13, 0.15, and 0.19 yuan, respectively. The PE corresponding to the latest stock price is 29.71, 24.60, 19.69x This is because the company's steel structure is developing well in the domestic market. We are optimistic about the company's development and maintain a “buy” rating.