Event: The company released its three-quarter report. In the first three quarters of 2019, it achieved operating income of 1,680 billion yuan, an increase of 42.54% over the previous year; realized net profit attributable to the parent company of 83.8863 million yuan, an increase of 105.01% over the previous year, in line with the company's previous performance forecast. Pre-receipt/prepayment increased dramatically, and the company's performance entered an explosive period. The company achieved operating income of 1,680 billion yuan in the first three quarters of 2019, an increase of 42.54% over the previous year. Among them, the third quarter alone achieved revenue of 631 million yuan, an increase of 64.89% over the previous year, exceeding the 31.79% growth rate in the interim report. Since 2018, the company's rail transit business has entered the performance implementation stage, driving high growth in the company's related business. Among them, the company's new rail traffic signal system orders in 2016-2018 and the first half of 2019 were 11.47/31.42/16.56/1,276 billion yuan respectively. The signal system business order cycle is long, and performance will gradually be released this year and next two years. Furthermore, the company's advance payment at the end of the reporting period was 266 million yuan, up 71.29% from the beginning of the period; the advance payment was 121 million yuan, up 146.26% from the beginning of the period, which also indicates a subsequent high increase in the company's performance. Profitability gradually increased. The company's gross margin for the first three quarters was 30.01%, and the gross profit margin for the third quarter was 30.73%, +0.52pct year-on-year and +2.66pct month-on-month. Profitability showed a positive trend. The company's net interest rate for the first three quarters was 4.92%, and the net interest rate for the third quarter was 8.53%, +5.78 pct month-on-month, mainly due to Suzhou Kehuan's failure to fulfill its performance promises, and the company cancelled compensation shares and confirmed investment income of 46.95 million yuan in the third quarter. The increase in the proportion of self-developed signals has led to an increase in gross margin. The BitRacon-type CBTC signal system independently developed by the company also has DTO/UTO driverless and interconnection functions, and is also suitable for various formats such as subways, modern trams, monorail/air rail, and urban railways. The company cooperated with Ansaldo in the early days, and the gross margin was between 20% and 25%, while the gross margin of self-developed products was 40%. Since the company first applied self-developed products on Chongqing Line 4 in 2016, the company's share of self-developed signal orders has continued to increase. In the first half of 2019, the bid amount for the company's self-developed signal system exceeded 990 million yuan, accounting for about 77.77% of the new bid amount won this year. The share has further increased, which will drive the gross margin of the company's rail traffic signal system to gradually rise. Investment proposals and profit forecasts expect the company to achieve revenue of 2,565 billion yuan, 3,071 billion yuan, and 3,532 billion yuan respectively in 2019-2021, and achieve net profit attributable to shareholders of the parent company of 148 million yuan, 235 million yuan, and 340 million yuan respectively, corresponding to current PE of 26, 16 and 11 times, respectively. Considering that the company has sufficient orders in hand and that the rail transit business has entered an accelerated stage of performance confirmation, the company was given a “buy” investment rating. Risks indicate that the bidding for urban rail transit projects has not progressed as expected, and there is a risk of impairment of assets such as accounts receivable.