Incident: The company released its 2018 three-quarter report. In the first three quarters, it achieved operating income of 3.266 billion yuan, a year-on-year increase of 4.24%, and realized net profit of 495 million yuan to mother, a year-on-year decrease of 19.84%, and basic earnings per share of 0.46 yuan, a year-on-year decrease of 20.44%. The company simultaneously released its 2018 performance forecast, with net profit of about 521-717 million yuan, with a change of -20% to 10%. Comment: In the first three quarters, the company's comprehensive gross margin was 29.06%, down 5.1 pct year on year, mainly due to a decline in the profit level of the engineering business; financial expenses were 210 million yuan, up 46% year on year due to the tight financing environment and rising financing costs this year; in the current period, the company strengthened its collection of accounts receivable, and the net operating cash flow was 792 million yuan, an increase of 1988% year on year. The stock of operating projects is relatively stable, and the gross margin of engineering projects has declined. The company's operating stock business is expected to remain stable in 2018. The new 2×135MW ultra-low emission project of CNPC Jilantai Salt Chemical Group and the 2×170t/h+1×130t/h boiler ultra-low emission project of Shandong Heze Fulin Thermal Technology Co., Ltd. are all under construction. In engineering projects, ultra-low emission transformation of power plants has gradually begun from large-scale thermal power plants to small and medium-sized units and coal-fired boilers; in the non-electric field, the company is stepping up technology research and development and implementing more atmospheric treatment engineering cases in the fields of steel, coking, non-ferrous, petrochemicals, etc.; the gross margin of the company's engineering projects has declined in the current period, mainly affected by market competition and rising raw material prices. The risk of controlling shareholders' equity pledge debt is relatively manageable. On October 16, the company issued an announcement. The cumulative number of shares pledged by the controlling shareholder Century Dihe (45.31% of the total shares) is 458 million shares, accounting for 93.57% of the total shares held in the company. After communicating with pledging creditors, Century Dihe separately added the rights and assets (market value of about 1.8 billion yuan) and other assets related to an office building project under construction in Chaoyang District of Beijing. Currently, the risk of controlling shareholders' equity pledge debt is relatively manageable. Maintaining the “increase” rating: the company's atmospheric control operation projects are relatively stable; the ultra-low emission market in the power industry is shrinking, the non-electric air treatment market concentration is low, and the company's engineering project orders are difficult to continue to grow; in addition, in the context of financial deleveraging, capital is tight, operating asset expansion and mergers and acquisitions in other fields are slowing down. Affected by this, we lowered the company's profit forecast. The net profit for 2018-2020 is 6.16, 6.52, and 682 million yuan, corresponding to EPS 0.57, 0.60, 0.63 yuan. “Accumulation” rating. Risk warning: The slow expansion of operational projects, lower than expected progress in receiving engineering orders in the non-electrical sector, and continued falling stock prices have exposed equity pledge risks.