The performance slightly exceeded expectations. Huayu Energy announced 2019 interim results. In the first half of the year, it achieved revenue of 750 million yuan, an increase of 39.6% over the previous year; realized net profit of 75 million yuan, a sharp increase of 281.8% over the previous year; and achieved earnings of 0.04 yuan per share. The company does not pay interim dividends. All businesses achieved growth. Among the company's three revenue segments, the drilling business revenue was RMB 310 million, an increase of 40.8% over the previous year, mainly due to increased revenue in markets such as Sichuan, Xinjiang, and Turkmenistan. The completion business revenue was 200 million yuan, an increase of 115.3% over the previous year, mainly benefiting from the rapid growth in completion business demand in the Tarim Oilfield in Xinjiang. Reservoir business revenue was RMB 250 million, up 8.2% year on year. Further increase in profitability The scale effect of the oil service industry is remarkable. As revenue increases, the company's profitability has further increased. The company's EBITDA rate for the first half of 2019 was 25.9%, up 2.9 percentage points from the previous year. The EBITDA rates for the drilling business and the completion business were 22.3% and 31.2%, respectively, up 1.9 and 10.6 percentage points from the previous year; the profitability of the completion business increased sharply, mainly benefiting from the increase in the share of the completion business in the highly profitable Tarim Oilfield in Xinjiang; and the EBITDA rate for the reservoir business was 26.2%, down 0.4 percentage points from the previous year. The company's net interest rate for the first half of 2019 was 10.0%, a sharp increase of 6.7 percentage points over the previous year. New domestic and foreign orders continued to show a growing trend. In the first half of the year, the company added a 5,000-meter drilling rig to carry out drilling and repair business in Xinjiang, and won consecutive bids for a number of turnkey technical service contracts for drilling and finishing fluids in Xinjiang. The regional order amount exceeded 130 million yuan; in the unconventional gas market in Sichuan and Chongqing, it received nearly 200 million yuan of comprehensive drilling engineering service projects. In the international market, the company won bids for a fracturing acidification project in Kazakhstan and several well repair projects; obtained a drilling tool trade project and a natural gas compressor maintenance project in Turkmenistan; signed a large order for completion tools in Indonesia; and signed a service order for a drilling rig in the Middle East. Maintaining the “buy” rating, we raised the company's 19-21 EPS forecast to 0.10/0.13/0.16 yuan to 0.10/0.13/0.16 yuan to reflect the positive impact of the company's significant improvement in profitability on profit margins. Maintain the target price of HK$1.05, corresponding to 10 times PE in '19, and maintain the “buy” rating. Risk warning: risk of domestic investment fluctuations, risk of overseas geological situation, risk of exchange rate fluctuations