(1) on October 29th, the company announced that the operating income in the first three quarters was 1.089 billion yuan, an increase of 1.17% over the same period last year, and the net profit reached 88 million yuan, down 0.86% from the same period last year. In the third quarter, operating income reached 324 million yuan, down 14.79% from the same period last year; net profit was 28 million yuan, down 27.7% from the same period last year, and earnings per share was 0.25 yuan, basically in line with expectations.

(2) the company announced that it has signed a contract for the 30MW coal-fired power station project of Dijinhan cement Plant of Pakistan.

Comments:

The performance is basically in line with expectations, and the cash flow situation is unstable under the influence of the downstream. The company's revenue in the first three quarters did not change much from last year, and the quarterly decline in the third quarter dragged down the data in the first three quarters. The cost was well controlled, and the gross profit margin rose 2.96 percentage points in the first three quarters. However, during the period, the expense rate rose 2.07 percentage points, and non-operating income also declined to a certain extent, squeezing the company's net profit, and the net interest rate also fell slightly by 0.16 percentage points. There is a certain pressure on the company's cash flow, and the net cash flow generated by operating activities is only 98 million yuan in the first three quarters, a decrease of 49.47% compared with the same period last year. This is mainly due to the fact that most of the downstream customers of the company are cement enterprises, which are affected by macro and industry aspects. The performance is not up to expectations and the cash flow is not sufficient, thus affecting the company, but we believe that the situation may be alleviated to a certain extent by the end of this year.

Actively expand overseas markets, benefiting from the strong ability of Sinopec to take orders. The company signed a 30MW coal-fired self-contained power plant project contract with Pakistan Dijinhan cement Co., Ltd. The company's overseas market revenue accounted for 27.20% of its revenue in 2013. Although the project contract does not have a significant impact on the company's performance, the company can still expand its business rapidly in the current downward economic situation. fully reflects the company's strong ability to take orders and high industry visibility and influence.

Maintain the recommended rating. We maintain our previous judgment that the EPS given in 2014, 2015 and 2016 is 0.26,0.36 and 0.50 respectively, and the PE of the corresponding stock price is 53,38 and 28 times respectively, which is higher than that of the industry PE. However, as the company is also in a period of transition, and the company has a strong ability to take orders from the background of state-owned enterprises, we are still optimistic about the long-term development of the company and maintain the "recommended" rating.

Risk hint: affected by the prosperity of the industry, the power generation of the company's project has been greatly reduced, and the policy impact has led to the failure of environmental protection projects to meet expectations.