Performance rebounded rapidly, and revenue from drilling and completion business increased dramatically. Huayu Energy announced 2018 results. It achieved annual operating income of 1.47 billion yuan, an increase of 33.7% over the previous year; realized net profit of 0.8 billion yuan, an increase of 1387.3% over the previous year; and achieved earnings of 0.05 yuan per share. The company does not plan to pay a year-end dividend for 2018. Among the company's three revenue segments, drilling business revenue was 540 million yuan, up 68.7% year on year, mainly due to a sharp rise in winning bids in Sichuan, Xinjiang, Shanxi and other regions; completion business revenue was 310 million yuan, up 86.8% year on year, mainly due to the sharp increase in completion workload in Xinjiang and southwest China; and the reservoir business revenue was 62 million yuan, up 1.2% year on year. Profitability has been further improved, and the company's profitability has been further improved. The company's overall EBITDA rate in 2018 was 22.3%, up 2.0 percentage points from the previous year. The EBITDA rates for the drilling business and the reservoir business were 15.3% and 24.0%, respectively, down 0.2 and 0.3 percentage points from the previous year; the completion business EBITDA rate was 31.3%, up 16.4 percentage points from the previous year, mainly due to the company's strong profitability by completing a large number of ultra-deep, high-temperature, and high-pressure completion operations in the Tarim Oilfield. The company's net interest rate in 2018 was 5.2%, up 4.9 percentage points from the previous year. The industry is picking up, and the company is progressing on multiple lines. With the recovery of the industry, the company has won many overseas bids from Kazakhstan, Turkmenistan, Iraq and other countries, and is actively expanding markets in Africa, the Middle East and Central Asia. At home, the company's development prospects in high-end domestic markets such as high depth and high pressure are improving, and it is also promoting the Sichuan shale gas platform oil service integration project, winning the bid for the Xinjiang high performance water-based drilling fluid technology service project, winning the bid for the Xinjiang coalbed methane fracturing project and the oily sludge biological treatment project. New progress has been made in business development. Upgrading the rating to “buy” We expect: 1) the company will significantly benefit from the recovery of investment in domestic and foreign markets and receive more high-quality orders; 2) as the scale effect increases, the company's profitability will further increase. The company's 19-20 EPS forecast was raised to 0.08/0.11 yuan (previously 0.05/0.07 yuan), and the 2021 EPS forecast was introduced to 0.14 yuan. According to the DCF valuation, the company's target price was raised to HK$1.05, corresponding to 11 times PE in '19, and the rating was raised to “buy”. Risk warning: risk of domestic investment fluctuations, risk of overseas geological situation, risk of exchange rate fluctuations