Matters: The company released its 2018 three-quarter report. In the first three quarters of 2018, the company achieved operating income of 3.266 billion yuan, up 4.24% year on year; net profit to mother of 495 million yuan, up -19.84% year on year; after deducting non-net profit of 494 million yuan, up -18.96% year on year. Comment: Revenue increased slightly, and performance fell short of market expectations. In the first three quarters of 2018, the company achieved operating income of 3.266 billion yuan, up 4.24% year on year; net profit to mother of 495 million yuan, up -19.84% year on year; after deducting non-net profit of 495 million yuan, up -18.96% year on year, lower than previous market expectations. The main reason for the increase in the company's revenue is the increase in revenue from construction projects and the increase in revenue brought about by the commissioning of new operating projects. The main reason for the mismatch between net profit growth and revenue growth is the rapid rise in operating costs due to rising labor and raw material prices in the market. The company's comprehensive gross profit margin for the first three quarters of 2018 was 29.06%. The main reason was that environmental protection reform in the power industry was gradually coming to an end, competition became increasingly intense due to shrinking market space, and overall gross margin declined. Three fee aspects: As the cost of comprehensive financing increased, the financial expense ratio increased by 1.84 pct to 6.45% year on year; the other two were well controlled, and both declined. Complete technical capabilities, simultaneous expansion in multiple fields. Currently, the company maintains a leading edge in the ultra-low transformation of large-scale thermal power units, and continues to deepen its development to customers in the central and western regions, while the transformation of small and medium-sized units and coal-fired boilers continues to grow rapidly. In the non-electrical sector, the company has implemented more engineering cases and obtained more market orders in the fields of steel, coking, non-ferrous, petrochemicals, etc. In addition, the company is also expanding new businesses such as flue gas removal from coal-fired power plants and zero discharge of desulfurization wastewater to ensure the continuous development of the company's business in the field of coal-fired power plants. According to official statistics released by the China Telecommunication Union, in 2017, the company ranked first for three consecutive years in terms of the number of orders received for the ultra-low emission transformation business of coal-fired power plants, and maintained the lead in many other indicators, strengthening the company's leading position in the atmospheric control industry. Continuous investment in mergers and acquisitions, and a steady increase in operating assets. In February 2018, the company purchased shares of Beijing Biketest Technology Co., Ltd.; in February 2018, the company co-funded Guizhou Jinzhou Electric Power Co., Ltd., Zhejiang Guanghan Environmental Protection Technology Co., Ltd. and Shenzhen Yichengda Investment Co., Ltd. to establish Guizhou Qingxin Wanfeng Energy Technology Co., Ltd. in April 2018; in April 2018, the company used its own capital to establish Xiong'an Fresh Smart Technology Co., Ltd.; on June 19, 2018, the company plans to purchase the target asset Huajiang Environmental Protection through a combination of issuing shares and cash payment At least 70% of the shares. Multiple investment and mergers and acquisitions in the past year have further strengthened the company's comprehensive strength in the field of environmental protection. At the same time, group investment cooperation has also helped the company establish stable customer partnerships. Profit forecasting, valuation and investment ratings. The company has a stable position in the field of thermal power transformation, and its market share is expected to continue to rise and acquire projects in the future. In addition, business expansion in the non-electricity sector and high-quality operating assets are expected to guarantee future performance. Considering that the company's financial costs have increased and profitability has been affected to a certain extent due to increased competition in the superposition industry, we lowered the company's net profit forecast for 18 and 19 to 685 million yuan and 752 million (the original forecast values were 808 million and 947 million), PE was 12 times and 11 times, respectively, maintaining the “recommended” rating. Risk warning: The order did not meet expectations.