Core profit increased significantly. Hilong Holdings announced its 2017 annual results, achieving full year operating income of 2.67 billion yuan, up 38.4% year on year; achieving net profit of 120 million yuan, a decrease of 4.4% year on year; after deducting the impact of exchange profit and loss, the company's annual profit was still 120 million yuan, up 50.7% year on year, and core profit achieved a significant increase of 0.07 yuan; earnings per share were 0.07 yuan. Final dividend of HK$0.01 per share. In 2017, the company's Oilfield Equipment Manufacturing and Services, Pipeline Technology and Services, Oilfield Services and Offshore Engineering Services segment revenue was 68.5%/-11.2%/24.3%/110.7%, respectively, with gross margin of 32.2%/24.4%/35.4%/20.7%, respectively; comprehensive gross margin was 31.7%, down 2.9 percentage points year on year; net profit margin was 4.7%, down 1.9 percentage points year on year; however, if the impact of exchange profit and loss was deducted, the actual net profit margin increased 0.6 percentage points year on year. Rapid expansion of the drill pipe business The biggest revenue increase of the company in 2017 came from the oilfield equipment manufacturing and service division. Its revenue reached 1.32 billion yuan, a sharp increase of 68.5% over the previous year, mainly driven by a sharp increase in sales of drill pipes and drill pipe components. In 2017, the company achieved rapid breakthroughs in the Russian and North American markets. Annual drill pipe sales doubled from 29,000 tons in 2016 to 58,000 tons in 17; of these, 52,000 tons were sold in the international market, a significant increase of 123% over the previous year. Orders picked up as the industry picked up, and the oil service business entered a new market, and the company's business showed a clear recovery trend. The pipeline anticorrosion service sector has obtained various projects including the Sinopec Rijing Pipeline Project, the Yunnan Energy Investment Investment Project, the Pakistan PPL Project, and the Indonesian Project; the oil service sector has signed a major drilling service order with Oman Petroleum Development Co., Ltd., for an initial operation period of ten years, which can then be further extended for up to five years. Maintaining the “buy” rating. Against the backdrop of the recent sharp rise in oil prices, the oil and gas equipment and oil service industry has shown an industry-wide trend recovery. We raised the company's revenue forecast for 2018-2020 to 3.23 billion, 3.73 billion, and 4.18 billion yuan. The company's profit margin climbed slightly slower than we expected. The net profit forecast for 2018-2020 was lowered to 160 million yuan, 210 million yuan, and 270 million yuan, corresponding to EPS of 0.09 yuan, 0.13 yuan, and 0.16 yuan respectively; however, we believe that the recovery trend of the company's industry is clear, and its profitability is still improving. Maintain the company's target price of HK$1.50, corresponding to 13 times PE in 2018, and maintain the “buy” rating. Risk warning: risk of delayed execution of overseas orders, risk of changes in the geographical situation in overseas markets, risk of foreign income exchange gains and losses, potential risks of changes in US trade policy