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Buy on recent dip The solid 3Q and stock buyback announced today reaffirm our positive stance on this stock. With the environmental monitoring equipment (EMS) cycle expected to pick up in coming years and valuations (11x 2019E PE) trading down to the lowest historically, we strongly suggest investors buy on the recent correction. Management thought that 25x PE ss reasonable, which is how they come up with RMB35 uplimit of the buyback plan, but with 33% earnings growth over 2017-20, we think the stock deserves an even higher valuation. Our TP is Rmb42/share.
