Guide to this report: A mature and stable ferry market will provide stable profits, and high dividends and repurchases will help increase the value of stock investment. Key investment points: Raise profit forecasts and target prices, and maintain a “prudent increase” rating. The stability of supply and demand in the Bohai Bay ferry market will keep profits stable, while increasing the dividend ratio and large repurchases will increase the value of stock investment. The 2019-21 EPS forecast was raised to 0.82/0.83/0.85 yuan (the original forecast for 2019-20 was 0.71/0.75 yuan). According to DCF and PE valuation methods, the target price was raised to 11.6 yuan (originally 10.49 yuan) to maintain a “prudent increase rating”. Fuel subsidies and return on investment have boosted profits beyond expectations. The sharp rise in fuel prices in 2018 led to a decline in profits in the main ferry industry. However, fuel subsidies increased by 27 million yuan, investment income from wealth management products increased by 40 million yuan, and cruise business reversed losses and increased gross profit by 40 million yuan, driving overall profit growth beyond expectations. Given the uncertainty of fuel subsidies and increased cash outflows from investments, we believe that the company's profits will remain stable in the future. Develop the flow of goods and international passengers to reduce excess capacity. The market is concerned that the delivery of the three Bohai Ferry ships under construction may lead to excess capacity. We believe that Bohai Ferry's development of cargo transportation will attract vehicles for transporting hazardous chemicals, trailers, etc.; developing international passenger transportation will divert part of its capacity. Supply and demand in the Bohai Bay passenger transport market will be basically balanced, and freight rates are expected to stabilize. High dividends and buybacks increase the value of stock investment. The dividend ratio was raised to 72% in 2018, and high dividends reduced the risk of reinvesting retained profits. On the basis of the repurchase of 180 to 200 million yuan of its own capital, the company plans to issue convertible bonds to raise 500 million yuan for repurchases, which is expected to drive back value. Risk warning. The amount of fuel subsidies fell short of expectations. The relaxation of regulations led to a slowdown in ferry traffic growth. Early renewal of passenger carriers led to asset impairment losses, cruise business losses increased, RMB continued to depreciate sharply, and the construction of a tunnel in Bohai Bay to divert ferry passenger and cargo transportation needs.