Key points of the announcement The company announced the 2018 three-quarter report. In the first three quarters, the company achieved operating income of 1.13 billion yuan, a year-on-year increase of 66.78%, and net profit of 51,7261 million yuan, a year-on-year increase of 129.53%. Profitability continued to recover. At the same time, the company expects annual performance to increase 200%-300% year-on-year, slightly exceeding expectations. Key investment points The revenue level and gross profit level continued to rise. The recovery trend was strong, and the company's revenue level maintained a high growth trend in the first three quarters. The revenue growth rates for the single quarter were 26.24%, 77.07%, and 85.51%, respectively, showing an accelerated growth trend. Looking at profit levels, the overall gross margin level for the first three quarters was 18.69%, up nearly 2 percentage points from the same period last year. The quarterly gross margin levels were 14.77%, 18.34%, and 21.01%, respectively, showing a trend of accelerated improvement. We believe that the company's business is expected to maintain a strong recovery trend under the condition that the company's organizational structure is streamlined, incentive mechanisms are in place, and management capabilities continue to improve. Obtain a railway product certification certificate to help develop business in the rail transit market. Recently, the company received the “Railway Product Certification Certificate (Trial Certificate)” issued by the China Railway Inspection and Certification Center, and obtained the 27.5kV cable-related product certification for electrified railways. According to relevant estimates from the Wire and Cable Branch of the China Electric Appliance Industry Association, demand for AC/DC traction power cables is expected to increase by more than 30% during the “13th Five-Year Plan” period. We believe that the acquisition of this railway product certificate shows the company's determination and ability to actively expand the rail transit market. The rail transit business is expected to become one of the company's potential major growth points in the future, continuously driving the company to increase revenue and profit. Investment recommendations We expect net profit from 2018 to 2020 to be 0.64, 1.05 and 200 million yuan respectively, with year-on-year increases of 276.16%, 65.51% and 90.34%, respectively, corresponding to the EPS under current share capital of 0.12, 0.20, and 0.38 yuan/share. Maintain the company's “increased holdings” rating based on comprehensive considerations. Risk warning: new business development or unmet expectations, cable product competition may further intensify