Guide to this report: The company has an advantageous position in an industry with strict entry control, and high dividends and stock repurchases reduce the risk of reinvestment. Investment points: stable profit and high dividends, initial coverage, “prudent holdings increase” rating, target price of 10.49 yuan. In the strictly regulated passenger ferry market, Bohai Ferry is the leader. Carriage rates and freight rates have remained stable, and profits are expected to be stable in the future. The EPS for 2018-20 is expected to be 0.69, 0.71, and 0.75 yuan, with growth rates of -6%, 3%, and 5%. In the past, the company's risk mainly came from investment in the cruise industry, but continued high dividends and implementation of repurchases since 2018 have reduced the risk of reinvestment, and the investment value is already evident. As high-speed rail diversion declines, passenger ferry traffic is expected to increase slowly. Since 2012, the Bohai Rim High Speed Rail has been built one after another, eroding the hinterland of ferry traffic and diverting passenger ferry demand, leading to a decline in passenger traffic. As the marginal impact of high-speed rail weakens, the source of ferry passengers in the hinterland is stabilizing, and demand for passenger transportation within the hinterland is growing naturally. Ferry passenger traffic has already rebounded in 2017, and is expected to grow slowly in the future. Capacity continues to be deployed, and ferry traffic is growing rapidly. As passenger ships and cargo vessels are launched one after another, the ferry capacity of the Bohai Sea Ferry will increase markedly. The company will increase traffic volume by developing large customers and adjusting prices. In the long run, the cost advantages of ferry transport over road transport will expand. Ferry traffic is expected to grow rapidly in 2019-20, and the carrying rate is expected to remain stable. The balance between supply and demand is weak, and ferry fares are expected to stabilize. Although ferry fares declined in 2008-16, oil tariffs have rebounded since 2013, but have been overshadowed by falling oil prices. Oil prices rose in 2017, and the increase in freight prices was evident. The balance between supply and demand will be weak in the future, and freight rates are expected to remain stable. Risk warning. The amount of fuel subsidies fell short of expectations, and the relaxation of overruns led to a slowdown in traffic growth. Early renewal of passenger ships brought about asset impairment losses, increased losses in the cruise business, increased losses in the cruise business, and the RMB continued to depreciate sharply, and the construction of a tunnel in Bohai Bay to divert passenger and cargo transportation needs on ferries.