The results for the 1st to 3Q of 2018 fell short of expectations. Infly Storage announced 3Q18 results: 3Q18 revenue fell 3% year on year to 130 million yuan; gross profit fell 5% year on year to 41 million yuan; net profit attributable to parent company was 115 million yuan, down 23% year on year, corresponding to earnings of 0.05 yuan per share. In the first three quarters, revenue increased 16%, gross profit increased 13%, and net profit increased 15%, slower than in the first half of the year and falling short of expectations. The main reason is that sales expenses are growing rapidly, with a year-on-year increase of 151% to 024 million yuan in a single quarter. At the same time, the 3Q18 economy declined, and the gross profit margin fell 0.5ppt year on year. The development trend is expected to expand production capacity, which will enable the company to gain a scale advantage and increase market share: 1) On September 7, the company announced that it intends to sign the “Intelligent Storage Equipment Production Line Project Investment Contract” with the Management Committee of Yushan Economic Development Zone in Ma'anshan, Anhui. After the project is completed, it will produce 2,000 sets of AGV/RGV shuttles per year, 150,000 tons of shelves, and 12 million square meters of spray molding, which will solve the bottleneck of the company's production capacity. Large-scale production will help the company improve product quality and reduce production costs. We continue to be optimistic that the acquisition of Nanjing Huade Storage will exert a synergistic effect and enhance the overall bargaining power of listed companies with customers and suppliers: on May 5, the company issued an announcement to acquire Huade Storage at a transaction consideration of 456 million yuan (50% equity +50% cash). On October 18, Yinfei Storage received feedback from the Securities Regulatory Commission. We will continue to monitor the progress of the acquisition. The warehousing robot system integration business has a lot of room for growth: According to the 1H18 semi-annual report, Yinfei Storage has about 43% of its revenue and 54% of orders from the warehousing robot system integration business. On the other hand, the company has established good cooperative relationships with JD, Yutong Bus, etc., with rich customer resources and great potential for future growth. Pay attention to the risk of major shareholders' equity pledges: Shenghe Co., Ltd. holds 46% of the company's shares, and the pledge ratio is about 49%, accounting for 22.6% of the total share capital. The profit forecast takes into account that the third quarter did not meet expectations and the impact of the economic downturn on warehousing and logistics, we lowered the 2018/19e profit forecast -17%/-19% to $0.89/102 million. The corresponding net profit growth rate was 6.3%/15.4%, respectively, and the net profit per share was 0.29/0.34 yuan, respectively. The valuation corresponds to the recommended current stock price of 31.1/26.9 times the 2018/19 P/E. Maintaining a neutral rating, the target price was lowered by 4.5% to 10.5 yuan (there is room for 15.3% increase), corresponding to 36x/31x 2018/19 P/E due to profit forecast adjustments and a downward revision of the valuation center. The risk is that trade friction between China and the US will intensify, the macroeconomy will stall, steel prices will rise, and the exchange rate will fluctuate.