Key investment points Electric fracturing pumps have been recognized by the market, and rotary guide products will soon be put on the market. The company's 6000 horsepower electric fracturing was sold in batches in 2016 after years of research and development, and is the only commercially operated product in the Chinese market. It has the characteristics of small floor space, low cost of use and low noise. Compared with traditional fracturing pumps, the main disadvantage of the company's electric fracturing pump is that it requires electric cooperation. Currently, the company's electric fracturing pump products are widely used in the Sichuan shale gas market. Among them, some CNPC block companies have established gas power plants, and a large number of power grids have been built in the Sinopec block to cooperate with the use of electric fracturing pumps. In addition, the company's rotary guidance products were also tested in the oil field this year. It is expected that batch supply will begin in 2020. Currently, rotation guidance is dominated by the three major international oil service companies, and there is a large gap in rotational guidance products in shale gas extraction in Sichuan. The oil service business began to accelerate: in 2018, the company had 9 oil service teams, 6 of which were domestic and 3 overseas. As the Sichuan shale gas market accelerated, the company increased its oil service team in the Sichuan market. Currently, the domestic oil service team has increased to 10, 2 new overseas teams have been added, and a complete fracturing team has been added. In the context of the current shortage of equipment, the company has equipment advantages compared to other oil service companies. In 2018, the company has equipment advantages, such as drilling rigs, fracturing pumps, etc., are the core equipment for shale gas extraction in China. It is 11 billion square meters, planned for 2020 It has reached 30 billion square meters, and domestic shale gas extraction has accelerated. Sichuan is one of the important incremental markets, and Sichuan shale gas has a large decay rate. Therefore, the number of drilling in the next few years will increase very strongly, and the company's oil service business will also begin to accelerate. Our view: Honghua Group (0196.HK) introduced China Aviation Technology as its largest shareholder in 2017 at a price of HK$0.77 per share. In 2018, it divested the offshore sector with serious losses. In the future, business and technical collaboration between the company and science and industry will gradually become apparent. We expect the company's revenue for the fiscal year 2019-2021 to be $51, 65.5 and $8.33 billion respectively. Due to higher management and sales expenses than expected, net profit was reduced by 17%, 4.5% and 2%, respectively, to 1.72, 3.37 and 523 million yuan, respectively, maintaining the target price of HK$0.86, corresponding to 0.9 times PB in 2019. Risk warning: International oil prices have fallen sharply; projects such as shale gas have not progressed as expected; risk of safety accidents.