The decline in municipal garden revenue and gross profit has led to poor performance. PPP and environmental protection are expected to help the performance pick up. The company's annual report shows that in 2015, revenue was 2,432 billion yuan, down 23.04% year on year, net profit was 199 million yuan, down 49.88% year on year, and EPS was 0.12 yuan/share. It is planned to distribute 0.12 yuan (tax included) for every 10 shares. The decline in the company's performance is mainly affected by the domestic economic environment. New orders have shrunk, and the gross margin of some projects has declined. By industry, real estate and garden revenue accounted for 85%, a slight decline; tourism, vacation/ municipal business accounted for about 10%, down 63%/86% respectively, and environmental protection business contributed 138 million dollars in revenue, accounting for 6%. It is expected to become a new profit growth point in the future. The company has announced PPP orders (including framework agreements) of 3.5 billion yuan in the past two years, equivalent to 110.76% of 2014 revenue, which guarantees future performance. Furthermore, 7.25% of Fengcai Ecology's shares were acquired by Sante Cable Car. Currently, the profit is over 100 million yuan, and it is expected that investment income will be confirmed in the future. The gross margin declined, and the expense ratio increased during the period. The company's gross margin was 20.84%, down 5.29 pct from the previous year. The three cost rates were 9.22%, up 1.59 pct from the previous year. Among them, the sales/management/finance expense ratio increased by 0.13/1.34/0.12 pct respectively. The increase in the management expense ratio was mainly due to the rapid decline in revenue scale. Asset impairment losses increased by 15.75 million yuan over the same period last year, income tax rate decreased by 9.10 pct, and overall net interest rate fell 4.39 pct to 8.20%. The net cash flow from operating activities was 400 million yuan (net outflow of 167 million in the same period in 2014), mainly due to the combined impact of the company's acquisition of Deep Blue Environmental Protection, and the 2014 BT recycling project bid guaranteed a high base of 150 million yuan. The “Ecology+Environmental Protection+People's Livelihood” platform has taken shape. The acquisition of Deep Blue Environmental Protection last year achieved revenue of 138 million yuan and net profit of 32.54 million yuan, fulfilling the 2015 performance promise despite slow business progress affected by downstream prosperity. In the future, the company is expected to channel garden customer resources and marketing channels to deep blue environmental protection, and provide management experience and financial support to achieve rapid growth in environmental protection business through the PPP model. Deep Blue Environmental Protection promised net profit of not less than 4640/6728/90.82 million yuan in 2016-2018, which is expected to bring considerable profits to the company in the future. At the end of 2015, the company had cash in hand of about 1.1 billion yuan. In the future, it is expected that mergers and acquisitions will continue to improve the layout of the environmental protection industry, extend to aquatic ecology and water treatment fields related to the main business, and the “ecology+environmental protection+people's livelihood” platform pattern will take shape. “Insurance” + “finance” is expected to become a new growth point, and diversified transformation can be expected. The company announced in November last year that it has invested in Kangmei Health Insurance with six companies, including Kangmei Pharmaceutical and Blue Shield Co., Ltd. The company accounted for 14.90%. In 2015, China's health insurance premium income totaled 241 billion yuan, an increase of about 52% over the previous year. There is great potential for market development. Furthermore, the company's financial control platform uses credit data accumulated through long-term cooperation with upstream and downstream to carry out online loans to achieve an efficient connection between offline projects and online investment, and is expected to become a new growth point in the future. Facing the environmental protection and entertainment trends of our peers, we expect that the company will also accelerate the pace of diversification, use the capital market to achieve cross-industry development, and have the potential to improve valuation. Investment advice: We predict that the company's 2016/2017 EPS will be 0.21/0.24 yuan respectively. Considering the company's PPP business development and transformation potential, we will give a target price of 8.4 yuan (corresponding to 40 times PE in 2016) and buy a -A rating. Risk warning: Consolidation falls short of expectations, macroeconomic downside risks.