The company's profit in 2018 was worse than expected. The company's revenue, gross profit and net profit rose 42.8%, 41.0% and 44.2% respectively in 2018 compared with the same period last year. The performance during the period was worse than we and the market expected. The main reasons for the decline in profits during the period include the rise in financing costs and foreign exchange losses caused by the devaluation of the RMB. Gross margin and net profit margin for the period fell 0.9 percentage points and 13.0 percentage points respectively compared with the same period last year.

The company's total installed photovoltaic capacity reached 7.31 gigawatts in 2018, up 22.0% from the same period last year. At the end of 2018, the company's total installed photovoltaic capacity and total photovoltaic grid-connected capacity reached 7.31 gigawatts and 6.96 gigawatts respectively, up 22.0% and 26.4% respectively from the same period last year. During the period, electricity sales rose 46.9% year-on-year to 7830 million kilowatt-hours, while the average electricity price fell 3.4% year-on-year to 0.76 yuan per kilowatt-hour. Under the premise of deleveraging, we expect the company's new photovoltaic installed capacity to reach 150MW / 180MW / 200MW respectively between 2019 and 2021.

We have adjusted our profit forecasts for 2019-2021 under the new assumptions. Taking into account the optimization of the debt structure, deleveraging strategy and the appreciation of the RMB, we expect the company's profits to rebound quickly in 2019. Our adjusted earnings per share forecasts for 2019 to 2021 are RMB 0.0651 / 0.0591 / 0.0645 respectively.

We maintain our "buy" investment rating and raise our target price to HK $0.50. Our new target price is equivalent to 6.5x / 7.2x / 6.6x 2019 to 2021 or 1.1x / 1.0x / 0.8x 2019 to 2021.