Honghua Group recorded revenue of RMB 2.05 billion in the first half of '19, an increase of 79% over the previous year; net profit was RMB 60.81 million, a significant improvement from the net loss of RMB 120 million in the first half of '18, in line with expectations. We maintain the 19-year paving earnings forecast of RMB 0.05 (up 150% year over year), the 20-year paving earnings forecast of RMB 0.08 (up 60% year over year), and the paving earnings forecast of RMB 0.09 (up 12.5% year over year). Affected by exchange rate fluctuations, we lowered our target price from HK$0.76 to HK$0.65, corresponding to 13 times the expected price-earnings ratio for 19 years. The closing price has room to rise by 18.2% from the target price, and we maintain our excess rating. Business performance is steady. Thanks to the increase in domestic upstream exploration and development activities, parts sales increased 143% year on year to RMB 9.1 billion, and oil field service revenue increased 151 percent year on year to RMB 313 million, which together led to a 79% year-on-year increase in revenue in the first half of '19. Due to changes in product structure, the gross margin of parts sales increased by 10 percentage points year-on-year to 17%, driving the gross margin further increased from 25.7% at the end of '18 to 27.2% in mid-'19. As of June 30, '19, the total value of the company's ongoing orders reached RMB 5.2 billion, of which the value of land equipment orders reached RMB 5 billion, and the value of in-hand oil field service orders reached RMB 200 million. Increased operational efficiency. We have noticed a significant increase in the efficiency of the company's operations. The management fee rate fell further from 11.2% in the same period to 8.8%, and the sales fee rate remained the same as 7.7% in the same period. Effective cost control led to a further increase in net interest rate from 2% in the same period '18 to 3% in the first half of '19. The market recovery trend is stable. 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. Shale opportunities can be expected. 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. Maintain an increase in holdings. We are optimistic about the company's development prospects given the sufficient inflow of orders and improved operational efficiency. We maintain the 19-year paving earnings forecast of RMB 0.05 (up 150% year over year), the paving earnings forecast of RMB 0.08 (up 60% year over year), and the paving earnings forecast of RMB 0.09 per share in '21 (up 12.5% year over year). Affected by exchange rate fluctuations, we lowered our target price from HK$0.76 to HK$0.65, corresponding to 13 times the expected price-earnings ratio for 19 years. The closing price has room to rise by 18.2% from the target price, and we maintain our excess rating.