Bailey Technology released its 2018 three-quarter report. In the first three quarters, it achieved operating income of 553 million yuan, +29.21% year-on-year; realized net profit of 91 million yuan, +55.43% year-on-year, of which net profit after deduction of net income was 87 million yuan, +49.52% over the same period last year. Net cash flow from operating activities in the first three quarters was $162 million, compared to $228 million for the same period last year, a significant improvement over the previous year. The weighted average ROE for the first three quarters was 9.04%, +2.47pct, gross margin was 40.24%, yoy +7.09pct, net profit margin was 16.37%, +2.76pct yoy. High growth throughout the year is worth looking forward to: Q3 showed a certain decline in revenue and net profit for the single quarter. We believe this was affected by its traditional business industry attributes. Judging from 2015-2017, net profit for the first three quarters generally accounted for 45%-50% of the full year, so there is no cause for concern about the decline in a single quarter. Furthermore, according to the investor exchange records published by the company, the Red Horse project has now completed the project capping, so Q4 equipment will enter the market one after another and complete confirmation. The sharp increase in advance payments indicates that the company's lithium battery revenue is expected to increase significantly. The company's advance payment for the current period reached 362 million yuan, compared to only 112 million yuan in the same period last year, an increase of 22.3% over the same period last year. Based on the company's advance payment financial data, we judge that the company had more objective new orders in the third quarter. The synergy of mergers and acquisitions has been unleashed, and the company is expected to develop by leaps and bounds: as of June 30, 2018, the total number of contracts in hand with the company has exceeded 4 billion yuan, of which the contract amount for the lithium battery business has reached 2.2 billion yuan. With the accelerated release of synergies in the lithium battery industry, according to the current order volume and project progress of the company's lithium battery business, it is expected that in the second half of the year, the company's lithium battery business revenue will grow by leaps and bounds: 1) Chengdu Bamo Technology 1 #、2 #、8 #厂房的窑炉和外轨、产线设备销售、安装及系统集成。 At present, 1 #和2, #厂房两个钴酸锂车间产线设计基本完成，设备和材料正在采购制作中；8, and #高镍车间的设计工作正在有序进行；2）红马科技10000 tons of production capacity have completed the bidding and procurement of major equipment; 3) Yu Hanyao's graphene ternary battery and conductive paste project has completed preliminary design, and detailed engineering design is ongoing. The plan is to acquire Hantec, the top international cathode cable provider, and cooperate strongly to open up the international market and expand the business field: the company plans to acquire 60% of the shares in the target company held by its majority shareholders Sun Ying-geun and Moon Mi-hee in cash. The acquisition of Hantec is significant and marks a strong alliance of leading domestic and foreign companies for cathode production lines: Over the past 20 years, Hantec has cooperated with well-known lithium battery materials companies such as Umicore (Korea), Samsung SDI, LG Chem, L&F, ECOPRO, POSCO, and COSMO, and has accumulated rich industry experience. The cooperation between the two will help Hantec open up a huge market in China, enhance the technical strength of the company's lithium battery business, and expand business areas such as precursors. Profit forecast and investment recommendations: We expect the company's operating income in 2018-2020 to reach 13.98, 24.97, and 3,067 billion yuan respectively, and net profit of $250, 4.81, and 623 million yuan respectively. The current stock price corresponding to PE is 15.32, 7.95, and 6.14X times, respectively. Risk warning: major adjustments in the new energy policy, and the acquisition was not successfully completed