Guide to this report: As the leading screw air compressor in China, the company is actively transforming from an equipment manufacturer to a geothermal power generation operator. It is expected that geothermal power plants will achieve initial large-scale operation from 2020, which can contribute to equipment revenue in the early stages, and has huge potential for subsequent operations. Investment points: Conclusion: First coverage, a “prudent increase in holdings” rating, with a target price of 11.45 yuan. The company is actively transitioning from an equipment manufacturer to a geothermal power generation operator, and is expected to achieve initial large-scale operations starting in 2020. Considering the decline in the prosperity of the domestic equipment market, the revenue contribution of geothermal power generation operations in 2020-21 is expected to be 0.15, 0.17, and 0.21 yuan. Based on the average valuation level of the industry, considering the future profitability and development prospects of the company's geothermal power generation operations, a certain premium is given to the company's target price of 11.45 yuan, corresponding to 2019H1 2.85 times PB, and a “prudent increase in retention” rating. Air compressors: Domestic market prosperity has declined, and competition for middle and low end products is fierce. The company's screw air compressors are widely used in the manufacturing industry. Due to the pressure on manufacturing investment in the first half of '19, the domestic air compressor market sentiment declined. The company's 19H1 screw engine revenue was 1.06 billion, down 9.4% year on year; from January to July, the cumulative fixed asset investment in the manufacturing industry increased by 3.3%, and the growth rate fell by 4 pct year on year. Judging that it will be at a low level throughout the year, the company's annual screw engine revenue is expected to drop by about 10%. Geothermal power plants: Contributing to equipment revenue in the early stages, the potential for later operation is huge. Currently, the company's overseas geothermal power plant projects have accumulated a total of 370 MW, with potential power plant revenue of 270 million US dollars. There is a lot of investment in the early stages of the power plant. Currently, the largest projects under construction are the Indonesian SMGP and SGI projects. The projects under construction are 2.53 billion and 350 million respectively. According to the total budget, the completion progress is only 43.3% and 38.0%. Higher investment is still needed in the later stages. On the one hand, early construction can contribute to equipment sales revenue, and on the other hand, stable operating income and cash flow after completion. Catalysts: SMGP and SGI geothermal power projects enter stable operation. Risk warning: Continued large-scale investment in the future has led to a deterioration in cash flow, a continued increase in interest-bearing net debt affecting long-term solvency, and increased industry competition has led to a price war.