According to the report, Nisshang Group achieved revenue of 1,991 billion yuan in 2017, an increase of 40.72% year on year; net profit to mother was 67.84 million yuan, down 1.45% year on year, lower than expected. Incident: On April 3, 2018, Nisshang Group released its 2017 annual report. Key investment raw materials and exchange rate factors have an impact on the company's profitability. It is expected to improve the revenue scale in 2017, exceeding expectations, and order volume continues to rise; raw materials and exchange rate factors have increased dramatically, and net interest rates have dropped sharply. In 2017, the company's production and sales volume increased compared to last year. The company achieved revenue of 1,991 billion yuan, an increase of 40.72% year on year. However, due to the sharp rise in raw material prices and the increase in product prices lower than the increase in raw material prices, the impact of the RMB exchange rate appreciation in 2017 led to an increase in the company's exchange profit and loss. Financial expenses increased 110.82% compared to last year, offsetting part of the profit. The total profit in 2017 was 67.84 million yuan, down 1.45% year on year. Profitability is expected to improve in 2018 with the improvement of the company's exchange rate risk management and control capabilities, continuous investment in high-margin new products, and large-scale benefits brought about by the expansion of production capacity. Rich experience in steel structures, the domestic equipment steel structure business is improving (1) Rich international experience, laying the technical foundation. The company is experienced in the industry. It has continued to cooperate with large international EPC companies such as Japan's JGC, Japan's Chiyoda, Japan's Takenaka Construction, Taiwan's Zhongding, American Fluor, France's Dechnib, Italy's Technemont, US CB&I, Sinopec SEG, CNPC Global, China Chengda, China Fifth Ring Road, China Construction, Datang Electric Power, China Yuanda Environmental Protection, etc., and has accumulated rich engineering experience in the field of equipment steel structures, and the industry has obvious advantages. (2) Continuous release of steel structures for domestic equipment. Steel structure orders for key domestic engineering projects increased dramatically in 2017. In particular, large-scale industrial electronics plants and cloud rail transportation projects grew significantly. The main undertakings included Nanjing TSMC wafer project, Chengdu Panda Electronics, Mianyang Jingdong, Guangzhou LG, Guangzhou Foxconn, Xi'an Samsung, Fujian Ningde New Energy EV Project, BYD Yinchuan/Guang'an Cloud Rail Project, Xiamen Software Park high-rise buildings, Nanning International Convention and Exhibition Center, Chongqing Banan Stadium, and the Nanchong Museum. In the future, as the domestic equipment steel structure market continues to expand, the company is expected to continue to gain strength with its technical advantages. The lightweight steel ring business gradually developed and became a new growth point for the company's performance. The company and well-known domestic steel mills Shougang and Ma Steel jointly set up a wheel steel test base to carry out R&D and production of high-strength lightweight steel rings. Currently, the products have passed IATF 16949:2016 quality system certification, and steel wheel products have passed US DOT product registration, US SMITHERS, US STL, and German TV testing approval to meet the requirements for lightweight European and American high-end trucks and buses. Currently, the company's lightweight steel ring products have been used in new energy vehicles for customers such as Changjiang, BYD, Jinlong Bus, Dayun, Zhongtong, Wulong, and Hengtong Bus. In the future, with the popularity of new energy vehicles, sales of this series of products are expected to increase further. Smart steel ring software and hardware products are being replaced soon. On the one hand, the company actively lays out high-quality strategic projects in the automotive aftermarket and emerging industries of the Internet of Things based on smart wheels to provide customers with value-added services to increase product market share and help customers open source and save money; on the other hand, through the construction of an O2O platform for auto parts, revitalize inventory, reduce channel levels, and effectively reduce user costs. At present, the company has completed smart steel ring 2.0 software and hardware products. It has gained a good reputation among commercial vehicle drivers. In the Sichuan and Xiamen regions, the company's intelligence Steel ring products have been laid out in depth. Profit forecast and valuation We expect the company to achieve revenue of 26.80, 31.80, and 37.34 billion yuan in 2018-2020, with year-on-year increases of 34.63%, 18.64%, and 17.42%, achieving net profit attributable to the parent company of 0.883, 1.067, and 133 million yuan, with year-on-year increases of 30.20%, 20.78% and 24.96%; EPS in 2018-2020 is 0.13, 0.15, and 0.19 yuan, respectively. The PE corresponding to the latest stock price is 31.83, 26.35, 21.092 times Since the company is located in the core area of the Belt and Road, it has an advantage in the Haixi Economic Zone. Overseas sales revenue is steadily increasing, and at the same time, steel structures are developing well in the domestic market. Optimistic about the company's development and maintaining a “buy” rating.