This report is read as follows:

Thanks to the release of the company's production capacity, the company's performance exceeded expectations in the first three quarters of 2018. The company is the leader in the field of bead steel wire in China, with the growth of production capacity, the company's performance will be further released.

Main points of investment:

Maintain the "overweight" rating. The company achieved revenue of 1.791 billion yuan in the first three quarters of 2018, up 32.49% from the same period last year, and the net profit returned to its mother was 171 million yuan, up 58.48% from the same period last year. The revenue in the third quarter was 631 million yuan, up 23.64% from the same period last year. The company's net profit in the first three quarters was 0.38,0.63 and 69 million yuan, respectively. The company's EPS for 2018-2020 will be increased to 1.06 yuan for 1.33 plum (1.66 yuan for the original 1.31 plum). Refer to similar companies, give the company an 18-fold valuation of PE in 2018, lower the company's target price to 19.08 yuan (formerly 21.96 yuan), and maintain the "overweight" rating.

The company's net sales interest rate has increased steadily, and the main business has developed steadily. The company's net profit margin for sales in the first three quarters of 2018 was 9.53%, up 2.56% from 2017; 2018Q3 gross profit margin was 10.98%, up 1.18% from the previous month, maintaining an upward trend. The company's ROE in the first three quarters of 2018 was 11.44%, up 1.8% from 2017. The company's main business has developed steadily, and the sales volume of leading products has increased significantly. We expect that with the landing of the company's production capacity, the output will further increase.

The asset-liability ratio continues to decline. The company's 2018Q3 asset-liability ratio fell 1.9 percentage points from 2017 to 49.71%, and its balance sheet remained robust. In the first three quarters of 2018, the company's expense rate (including R & D) was 6.55%, down 2.41% from 2017, and the company's expense rate gradually declined.

The industry pattern is good, and the company's competitive advantage continues to improve. The company is the leader of China's bead steel wire industry and participates in the formulation of industry standards. The domestic market share of bead steel products is maintained at about 30%. It is the largest bead steel wire manufacturer in China and has a solid position in the industry. After extensive development, the pattern of the bead wire industry is stable and the barriers to entry are raised. As the leader of the industry, with the gradual improvement of its own production capacity and the stability of the industry pattern, the company has obvious competitive advantages and entered a period of rapid development.

Risk hint: tire production is down sharply.