This report is read as follows:

The net profit in the first three quarters was 452 million (+ 8.73%), slightly lower than expected, mainly due to high financial costs corresponding to the maturity of short-term loans. It is expected that the derailment of the sample car before and after the Spring Festival, if the acceptance is smooth, it will coincide with the mid-term of subway bidding. The target price is 17.02 yuan.

Main points of investment:

Maintain the "overweight" rating, with a target price of 17.02 yuan. The company generated 2.372 billion yuan in income in the first three quarters of 17 years, with a net profit of 452 million, an increase of 8.73% over the same period last year. On the contrary, the income growth rate of 27% actually reflects the strong demand for orders, but the increase in financial costs has dragged down the growth rate of net profit; looking forward to the expected derailment and delivery of sample cars around the Spring Festival, acceptance will coincide with the middle period of subway bidding. It maintains the forecast of net profit of 6.96max in 18,029 million, corresponding to EPS of 0.57 and 0.85 yuan, and target price of 17.02 yuan.

Revenue growth reflects strong demand for orders, and financial expenses are a drag on profit growth. The company's revenue grew by 27.31% in the first three quarters, reflecting the strong demand for orders, especially the deep processing of aluminum profiles and the hot orders for large parts of the high-speed rail car body. For example, Apple Inc's domestic orders for three types of notebook shells this year are basically provided by Liyuan, and the wheel orders of CITIC Daika add new Tesla, Inc. terminal customers and Qingdao Sifang major customers in the supply of car body parts. However, the net profit growth rate in the first three quarters was only 8.73%. The reason for this is that the financial expenses corresponding to the maturity of short-term loans reached 218 million in the first three quarters, an increase of nearly 40 million over the same period last year. If this factor is excluded, the net profit growth rate is 18.37%.

Derailment before and after the Spring Festival to hand over the whole car sample, if the acceptance is smooth, it will coincide with the mid-term of subway bidding. At present, the 22-seat rail car factory building is now in the stage of equipment debugging and the production of some parts, which belongs to the ready-to-go stage. in the follow-up, we think that the front, shell, bogie and windows of the whole vehicle are all provided by the company, and other parts are highly likely to be outsourced. After passing the acceptance inspection in the first half of next year, there will be a public tender for Shenyang Line 4 in October, as well as bidding or procurement for Malaysia's high-speed rail, India's high-speed rail, Singapore Metro and so on.

Catalyst: the acceleration of subway construction in Northeast China brings the purchasing demand of car body; the order of rail transit vehicle.

Core risk: the progress of rail transit vehicle acceptance is slower than expected.