Event: The company announced its 2018 three-quarter report. The company achieved operating income of 2,805 billion yuan in the first three quarters, an increase of 19.96% over the previous year; net profit of 331 million yuan, an increase of 176.62% over the previous year; and EPS of 0.48 yuan. The third quarter achieved operating income of 976 million yuan, an increase of 15.79% over the previous year; net profit of the mother was 89 million yuan, an increase of 52.99% over the previous year. The results of the three-quarter report continued to grow at a high rate, and results in reducing costs and increasing efficiency are beginning to show. The company's chemical business is in an industry boom cycle. Compared with the same period last year, sales prices of major chemical products have all increased to varying degrees. Some of the company's military products have entered the batch supply stage, and the order release effect is obvious. The military performance in the first three quarters increased by more than 30% year on year. Since last year, the company has vigorously promoted the concept of refined management within the company, and management costs have been drastically reduced through the use of price comparison procurement, reasonable inventory control, and reduction of labor costs for managers. In the first three quarters, the company's management expenses fell by 49.23% year on year, amounting to 123 million yuan. The continuous improvement of the company's management will help the company reduce the cost of three fees, increase the company's cash flow level, and play a good role in promoting the company's performance. We believe that the volume and price of the company's chemical products is expected to remain high in the next two years, and that the chemical business still has a lot of room for growth during the boom cycle, which is a major profit growth point for the company in the future. At the same time, the stable cash flow brought by the chemical business will play a good supporting role in the development of the company's military business. The performance of military subsidiaries is generally released in the second half of the year. We expect that the two subsidiaries are expected to release good performance throughout 2018, and the full-year merger will bring a significant increase in the company's performance. It is expected that autonomous and controllable graphics processing chips will be mass-produced next year, and the capital increase of the nine powerful information shields will form an industrial synergy effect. The high-performance SG6931 graphics processing chip independently developed by Shaoguang in Changsha was successfully streamed in MPW at the beginning of February this year, and optimized streaming began at the end of September. It is expected that the optimized streaming will be completed by the end of the year, and mass production and promotion of the product will be achieved next year. The company has completely independent intellectual property rights on this chip and is fully guaranteed in terms of information security and supply capacity. In the future, it will further expand the market for supporting applications of weapons and equipment, civilian GPUs, etc., to achieve autonomy and control in the GPU field. Jiuqiang Information Shield mainly focuses on autonomous, controllable, and reinforced computers, and has a certain amount of weight in various military industrial groups. After Shaoguang of Changsha increased capital and shares in Jiuqiang Xundun, Jiuqiang developed a graphic display module based on the company's graphics processing chip to support various equipment models. It plans to complete verification within the year and promote application next year. We believe that in the context of autonomy and control, the introduction of the company's graphics processing chips will greatly enhance the company's core competitiveness. The company's collaboration with the nine strongest information shields has a strong synergistic effect and will form a strong guarantee for the demand for graphics processing chips in the short term. Earnings forecasts and ratings. The company's chemical business has benefited from supply-side reforms and environmental policies, and ushered in a period of rapid growth in volume and price; military chips and integrated circuits have long benefited from autonomous, controllable, and localized alternative policies. We are firmly optimistic about the company's future development prospects. We expect the company's operating income from 2018 to 2020 to be 4.833 billion yuan, 6.085 billion yuan, and 7.192 billion yuan respectively; net profit attributable to the parent company from 2018 to 2020 is 520 million yuan, 699 million yuan, and 863 million yuan respectively; EPS is 0.75 yuan, 1.01 yuan, and 125 million yuan respectively. PE corresponding to the current stock price is 12, 9 times and 7 times, respectively, maintaining a “buy” investment rating. Risk warning: the prosperity of the chemical industry fluctuates; the performance of military subsidiaries falls short of expectations; graphics processing chip development falls short of expectations