The company released its 2018 three-quarter report: revenue for the first three quarters was 339 million yuan, up 4.64% year on year; net profit from net profit of 86.51 million yuan, up 1.25% year on year; net profit after deducting net profit of 62.27 million yuan, down 26.10% year on year. Quarterly revenue for the third quarter was 129 million yuan, up 44.39% year on year, and net profit was 28.82 million yuan, up 6.15% year on year. Revenue was stable in the first three quarters, gross margin declined, and non-recurring profit and loss drove performance growth. The company achieved revenue of 0.89, 1.21, and 129 million yuan in the first three quarters of 2018, respectively, with year-on-year increases of -17.37%, -4.66% and 44.39%; net profit of net income was 2388, 3381 million yuan, and 28.82 million yuan respectively, up -17.93%, 15.80 and 6.15% year on year. Gross profit margin was 46.64%, down 5.65 percentage points year on year; net profit margin was 25.51%, down 0.86 percentage points year on year. The sharp increase in sales expenses and management expenses led to a significant decline in the company's non-net profit in the first three quarters; the company received government subsidies of 26.76 million yuan in the first three quarters, an increase of 25.16 million yuan over the previous year, which was an important reason for the increase in performance. Currently, the company mainly supplies military ships, benefiting from increased demand for naval construction and maintained steady growth. As a professional supplier of marine electrical and automation systems in China, in the face of the huge global civilian market space, growth potential will be even more prominent. At the same time, the company launched an employee stock ownership plan, which helps the company to concentrate on development. Profit forecasting and valuation advice. We predict that the company will achieve net profit of 1.24/1.49/180 million yuan in 2018-2020, corresponding to the closing price of October 26, which is 23/19/16 times higher, maintaining the “prudent increase in holdings” rating. Risk warning: Product gross margin continues to decline; the expansion of civilian goods falls short of expectations.