Core idea: The loss in the first half of the year did not hinder the annual results: the company's revenue in the first half of the year increased by 151.38% year-on-year mainly due to the rapid growth of the technical consulting and planning service business. This was mainly due to the increase in revenue of the Clean and Control Housing Design Institute in the planning field; the net profit loss of 23.57 million to the mother was mainly due to a sharp increase in management expenses. The company won the bid for the Qian'an Sponge City PPP project in May, with a total investment of 1.12 billion yuan. The project company is currently set up. The project company is expected to confirm revenue in the fourth quarter, and the annual results will be worry-free; additional funding will ease pressure and accelerate industrial layout: In July 2016, the company issued a plan to raise no more than 4.856 billion yuan. After the issuance is completed, the controlling shareholder Huarongtai's shareholding ratio will exceed 30%, further stabilizing the controlling shareholder position. On the other hand, the pricing reference date is the first day of the issuance period. The controlling shareholder did not participate in the market inquiry process for pricing this issue, but promised to accept the market inquiry results. After deducting issuance fees, all funds raised will be used for Sponge City PPP construction projects, smart drainage system construction projects, and soil restoration projects. Financial forecasts and investment recommendations We maintain the company's net profit of 0.36, 2.85, and 472 million yuan respectively in 2016 to 2018. Without considering this additional EPS issue, it is 0.04, 0.28, and 0.47 yuan respectively. If this increase is taken into account, EPS will be diluted, but there is a lot of potential room for future profit growth in the company's fund-raising projects, and performance is expected to improve dramatically. The current valuation of comparable companies is 34 times in 17 years. Considering the company's scarcity and growth potential in the field of sponge city planning and construction, a 20% premium is given, or 40 times PE in 2017, maintaining a target price of 11.2 yuan, maintaining an “increase” rating. Risk suggests that the bidding for PPP projects is uncertain, and the number and speed of execution of orders will significantly affect the 2017-2018 performance; there may be uncertainty about capital raised through non-public stock offerings; due to factors such as macroeconomic conditions and the government's ability to pay, the construction progress and payment situation of the Sponge City project may fall short of expectations;