Honghua Group announced a positive profit forecast. It is expected that the net profit of the mother in the first half of '19 will turn a year-on-year loss into a profit, in line with our expectations. We expect the company to record net profit of RMB 100 million in the first half of the year. Benefiting from China's strong energy security cycle and abundant company order flow, we maintain our 19/20/21 paving earnings forecast of RMB 0.05/0.08/0.09 per share. Affected by the weak market, we lowered our target price from HK$0.82 to HK$0.76, corresponding to a price-earnings ratio of 14.0 times in '19. However, our view of the company's future is still positive. The current price has room to rise by 18.8% from the target price, and we maintain our increase rating. The market recovered strongly. Against the backdrop of a long-term recovery in global upstream investment, China's upstream investment is recovering faster and more vigorously. According to CNPC and Sinopec's capital expenditure plan, we expect its upstream capital expenditure to increase 16% and 41% year on year respectively in 2019, exceeding Bloomberg's 2019 global capital expenditure growth forecast of 9% year on year. Driving oil service companies to simultaneously increase their workload and order size. Sichuan shale gas opportunities. In the Sichuan shale gas market where Honghua focuses, the oil service market is booming. In the first half of '19, drilling prices increased by about 10% year on year, and fracturing prices increased by about 2%-3% year on year. We believe that given China Oil's aggressive shale gas production plans in the future, the Sichuan shale gas industry market will maintain a tight balance in the next few years. Given Honghua's leading position in the high-end fracturing equipment and services market, we believe that Honghua is a key beneficiary of the future expansion of the Sichuan oil service market. Improved business performance. We have noticed a significant increase in the efficiency of the company's operations in '18. Management expenses in 2018 accounted for 11.2% of total revenue, down from the same period last year (25.5%). Sales expenses accounted for 7.4% of total revenue, down from the same period last year (10.7%). The improvement in operating efficiency led operating profit to turn a loss into a profit, and the company recorded an operating profit of RMB 339 million. Although the company's balance ratio increased by 3 percentage points to 61% year on year, interest expenses in 2018 decreased 29.6% year on year due to the central enterprise background of science and engineering, the majority shareholder, and changes in the RMB exchange rate. Maintain an increase in holdings. Benefiting from China's strong energy security cycle and abundant company order flow, we maintain our 19/20/21 paving earnings forecast of RMB 0.05/0.08/0.09 per share. Affected by the weak market, we lowered our target price from HK$0.82 to HK$0.76, corresponding to a price-earnings ratio of 14.0 times in 2019. However, our view of the company's future is still positive. The current price has room to rise 18.8% from the target price, and we maintain our increase rating.