Performance summary: The company released its 2018 three-quarter report. The first three quarters achieved revenue of 370 million yuan, a year-on-year decrease of 14.2%, net profit of 54.77 million yuan, a year-on-year decrease of 22.5%, and a slight increase of 8.9% over the previous year. Among them, Q3 achieved revenue of 180 million yuan, a year-on-year decrease of 11%, and net profit of 34.631 million yuan, an increase of 8.3% year-on-year. Passenger traffic improved during peak season, and reduced ticket prices weighed on performance. 1) In terms of passenger traffic, the company achieved 2,535,200 ticket purchasers (YoY -8.55%) in the first three quarters of 2018. Among them, the number of ticket purchasers for the Environmental Passenger Transport/Ten Mile Gallery/Baofeng Lake/Yangjiajie Ropeway was 2,728,000/997,000/690,000/427,000 respectively, with year-on-year changes of -3.8%/+10.6%/+12.7%/-15.5%. Compared with Q2, the Yangjiajie Ropeway was mainly affected by the construction of Wulingshan Avenue and Baizhangxia Road in Wulingyuan District and the Baizhangxia section of the city Park section The impact of implementing traffic restrictions has left them isolated and closed compared to core scenic spots, leading to a continued decline in the number of people visiting Yangjiajie ropeway. 2) The recovery in passenger flow during the peak season led to improvements in the performance of various businesses compared to the first half of the year. The travel agency business/environmentally friendly passenger transport/Baofeng Lake Scenic Area/Shili Gallery Scenic Area/Yangjiajie Ropeway achieved revenue of 100 million yuan (YOY -26.8%) /140 million yuan (-14.3%) /52.269 million yuan (YOY +14.7%) /386.63 million yuan (YOY -1.8%) /28.174 million yuan (YOY -12.7%), and revenue performance improved markedly from the first half of the year. Cost control has been strengthened, and endogenous profitability has been hampered by environmentally friendly passenger transport. Following the reduction in ticket prices for environmentally friendly passenger buses in scenic spots in November 2017, they have been lowered again since September 22, 2018 according to the latest ticket price reduction policy of the Provincial Development and Reform Commission. In the medium to long term, the company's original business performance will continue to be suppressed to a certain extent. The reduction in ticket prices caused the overall gross margin level to drop by about 1.3 pp to 37.4%, which dragged down the overall performance. However, during the reporting period, the company's operating and management efficiency was further improved. The sales/management/finance expense ratio fell to 3.7% (YOY-2PP)/13.8% (YOY-0.4PP)/0.9% (YOY-3PP), respectively, and the overall period expense ratio improved markedly by 5.4pp. As future ticket prices stabilize and operations continue to improve, it is expected that there is still room for improvement in profitability. Investment in the ancient city of Dayong is progressing steadily, creating a highlight for cultural tourism. The company successfully raised 840 million yuan in capital for the Dayong Ancient City project in 2017. In order to further improve project construction, the company adjusted the total investment amount from 1,883 billion yuan to 2.21 billion yuan, and the issuance of 620 million yuan convertible bonds is increasing the construction of Dayong Ancient City, fully demonstrating the confidence and determination of the company's development projects. As a cultural and leisure scenic resource different from natural scenic spots, Dayong Ancient City is expected to start a new profit growth engine for the company in the future. Transportation benefits are yet to be released, and passenger flow can be expected to increase. Wulingshan Avenue was officially opened to traffic during the 11th Golden Week of 2018 — from the intersection of Ziwu West Road and Dayong West Road in the central city to the north, along the Zhangqing Highway to the north, and the end point is connected to Gaoyun Road in Wulingyuan District, effectively driving 170,000 people (YOY +11.5%) to the Wulingyuan core scenic area during the 11th Golden Week; in addition, the 2019-2021 Qianzhangchang Express Railway and the Zhangjihuai High Speed Rail will also be built and opened to traffic one after another. The transportation network around the scenic area is gradually improved and optimized. On the one hand, it is expected to catalyze the growth of tourist traffic in the scenic area, and on the other hand, it is beneficial to the company's integration It has rich tourism resources and formed Collaborative development is expected to improve the company's performance due to improved transportation and a recovery in passenger flow. Earnings forecasts and ratings. Considering the impact of the company's ticket prices, the steady progress of the Dayong Ancient City project or the launch of a new performance engine, and future traffic improvements that are expected to provide an impetus for performance recovery, the 2018-2020 EPS is expected to be 0.11 yuan, 0.14 yuan, and 0.18 yuan respectively, maintaining the “increase in holdings” rating. Risk warning: The construction and operation of the Dayong Ancient City project fell short of expectations, and the transportation network improved or failed to meet expectations.