Investment Highlights The company released its 2018 annual report: achieved revenue of 755 million yuan, a year-on-year increase of 59.40%; net profit to mother was 503.018 million yuan, a year-on-year decrease of 24.58%; net profit after deducting non-return to mother was 35.119 million yuan, a decrease of 34.72% year-on-year. During the reporting period, the company's equipment development and support business achieved revenue of 154 million yuan, a year-on-year decrease of 30.44%, mainly because the business was affected by factors such as customer agency adjustments, which delayed the signing of some contracts and payments, and failed to achieve confirmed revenue during the reporting period. At the same time, delays in payment plans for military customers also led to a significant difference between the company's net cash flow from operating activities and net profit for the year. The gross profit margin of the company's equipment development and guarantee business was 45.88%, an increase of 2.57 percentage points over the previous year, and profitability was not affected. During the reporting period, the company's aviation maintenance and service achieved revenue of 589 million yuan, an increase of 140.3% year on year, mainly due to MMRO; gross profit margin of 28.07%, a decrease of 13.17 percentage points year on year, mainly due to MMRO mainly engaged in aircraft overhauls and route maintenance, and gross margin was relatively low (the company's gross profit margin for overseas business in 2018 was 19.16%, down 13.77 percentage points year on year; MMRO2015-2017 gross margin was less than 20%), which lowered the overall gross margin level of the aviation maintenance and service business. During the reporting period, about 22 million yuan of intermediary and interest expenses arising from the company's merger and acquisition of Estonian Magnetic was paid during the reporting period, which affected the current profit. We adjusted the profit forecast based on the latest financial report. We expect the company to have an EPS0.54/0.70/0.91 yuan/share in 2019-2021, corresponding to a valuation of 34/26/20 times (2019/10/24), and continue to give the company a “prudent increase” rating. Risk warning: Military procurement fell short of expectations, and competition in the civil aviation maintenance market intensified.