Ping An's view: Jiangsu landscaping private high-tech enterprise, business structure optimization promotes profitability improvement: Huawang Co., Ltd. is located in Danyang, Jiangsu, and listed as a sub-IPO in August 2016; the company's 2015 operating income was 539 million yuan, and municipal greening and road greening projects accounted for nearly 90% of revenue; before listing, equity incentives were given to core management teams and technical personnel, and the total shareholding of executives was about 4.18%; in April 2016, it was qualified as a high-tech enterprise. At the same time, the share of the company's municipal administration (municipal landscaping+road greening) projects increased significantly, and the profit margin increased significantly, With continuous improvement, the company's net profit margin increased to 14.97% in Q3 2016. The strategic integration and horizontal integration is clear, and the company is marching into a comprehensive national landscape and ecological platform: the company's business is based in East China, and East China and North China regions account for 61.78% and 28.58% respectively. The company will vigorously expand South China, Southwest China and other places through IPO fund-raising projects, and the cross-regional development strategy is clear; at the same time, the company has recently changed its name and expanded business scope to ecological management, environmental protection and soil restoration, extending the main landscaping business to the ecological environment protection industry. The company's cross-regional expansion and superposition of the industry chain strategy will be obvious. The company developed into a leader in garden ecology. There are plenty of orders in hand, and the number of new orders has exploded, and the company has entered a channel of high performance growth. By the end of 2015, the company had major BT orders of about 433 million yuan, guaranteeing the company's performance in 2016; since August 2016, the company has signed new orders and PPP framework agreements totaling 2.97 billion yuan, which is 5.51 times the company's 2015 operating income. Of these, 1.47 billion yuan of construction orders will centrally release performance in 2017 and 1.5 billion yuan PPP orders are conservatively expected to enter the performance release cycle in 2018, and a huge number of new orders have helped the company enter rapid performance growth. The urbanization process, sponge city construction, and PPP policy dividends have been released, and garden engineering enterprises have once again welcomed the blue ocean. In 2015, the urbanization rate was 56.1%, and there is still plenty of room for improvement compared to the 80% ratio of developed countries; at the same time, the annual investment in sponge city construction has brought more than 150 billion yuan to the landscaping market. The Ministry of Finance has invested about 12.6 trillion yuan in PPP projects. Of these, 82.78% of the projects are highly related to landscaping and ecological restoration. The promotion of PPP has brought huge markets to the garden industry, while optimizing business models and reducing the pressure on corporate capital. It is expected that 2017 PPP will enter a major year of performance release. Profit forecast and investment advice: “Small market capitalization, high growth, big strategy” companies were given a “recommended” rating for the first time. Benefiting from urbanization, sponge city construction, and PPP promotion, and at the same time taking advantage of its own listed company platform, Huawang Co., Ltd. signed new orders rapidly. The new orders signed in 2016 were 5.51 times the revenue in 2015. The joint (industrial chain extension) and horizontal (cross-regional expansion) strategy helped the company grow into a national garden and ecological integration platform, and the company entered a rapid growth channel. We expect the company's operating revenue for 2016-2018 to be 602 million yuan, 809 million yuan and 1,169 million yuan respectively, with year-on-year growth rates of 11.65%, 34.47% and 44.47% respectively; net profit of 89 million yuan, 120 million yuan and 172 million yuan respectively, year-on-year growth rates of 31.6%, 34.6% and 43.4% respectively. EPS for the same period was 0.67 yuan, 0.90 yuan and 1.29 yuan respectively. Corresponding to the closing price on January 13, 2017, the 2016-2018 PE was 62 times, 46 times and 32 times, PB is 6.3 times, 5.5 times, and 4.7 times, respectively. Before the launch of Huawang Co., Ltd., the core members were fully motivated, and the management and core technical personnel were fully motivated to ensure the implementation of the company's joint and horizontal strategy. At the same time, a huge number of orders will centrally release performance starting in 2017. The increase in performance is determined, covering the company for the first time, and giving it a “recommended” rating. Risks indicate risks such as the macroeconomic growth rate falling short of expectations; fixed asset investment growth falling short of expectations; PPP projects not progressing as expected; the implementation of the company's cross-regional expansion projects falling short of expectations; the risk of bad debts on accounts receivable; and the extension of the company's industrial chain falling short of expectations.