Earnings in 2018 jumped YoY by 67.7%, in line with profit alert. Sales in2018 dropped 8.1% YoY while earnings jumped YoY by 67.7% whencompared against the pre-restated earnings of RMB 673 mn recorded in2017. Gross margin went up YoY by 2.1 ppt to 23.2% while net margin wasup by 0.5 ppt to 3.7%. New orders in 2018 went up YoY by 8.7% to RMB34.9 bn, with export orders up sharply by 232% YoY to RMB 6.64 bn.
We expect newly installed power capacity in China to beapproximately 118 GW in 2019, down YoY by 5.1%. In which, thermal,hydro, nuclear, wind and solar are expected to contribute 35GW, 10GW,8GW, 25GW and 40GW, respectively, of new power capacity additions in2019. Non-hydro renewable energy installation is expected to be between70GW and 80GW per year from 2019 to 2020.
Approximately 30 units of new nuclear power projects are expected tobe approved before the 13th Five-Year Plan period ends. Nuclearpower investment in China is expected to be relaunched beginning in 2019in a massive scale under the highest safety standards. The nuclearrelaunch was confirmed by a relevant official and we believe the relaunchwill be a strong catalyst to the power equipment industry.
We reiterate the "Buy" rating and further raise our TP to HK$ 9.20. Ourrevised EPS estimates from 2019 to 2021 are RMB 0.449, RMB 0.520 andRMB 0.618, respectively. Our new TP corresponds to 17.4x/ 15.0x FY19/FY20 PER or 0.8x/ 0.8x FY19/ FY20 PBR.