Key investment events: 2016 Annual Report and 2017 Quarterly Report On April 25, the company announced its 2016 annual report, achieving revenue of 2.103 billion yuan, an increase of 138% over the previous year, net profit of 186 million yuan, an increase of 82.38% over the previous year, net profit after deduction of 180 million yuan, an increase of 92.86% over the previous year, and an EPS of 0.37 yuan, an increase of 68.18% over the previous year. The profit distribution plan is to transfer 0.5 yuan to 10 shares for every 10 shares to increase 10 shares. The first quarter reported revenue of 363 million yuan, an increase of 3% over the previous year, and net profit of 101 million yuan, an increase of 152% over the previous year. The garden engineering business increased profit, and environmental protection engineering and equipment declined slightly. The company's net profit to the parent increased by 884 million yuan year-on-year, mainly due to the merger of the garden engineering business, gross profit increased by 230 million yuan, sales expenses and management expenses were reduced by 1.9 pct and 2.8 pct respectively due to the dilution of scale effects, and financial expenses increased 278% year on year due to mergers and acquisitions of Sino-Art Ecological Finance. By industry, equipment sales revenue was 350 million yuan, down 5% year on year, gross profit margin was 25.5%, accounting for 17% of revenue; water conservancy and port construction revenue was 4.1 billion yuan, up 25% year on year; gross profit margin was 31%, accounting for 20% of revenue; environmental engineering and other revenue was 180 million yuan, down 5% year on year; China Art Ecological Garden Project business revenue was 1.16 billion yuan, gross profit margin 21%, accounting for 55% of revenue. The merger and acquisition of Zhongyi Ecology entered the garden project, and epitaxial expansion consolidated the foundation of water treatment. In February 2016, it invested 1.24 billion yuan to acquire 100% of Zhongyi Ecology's shares. The company has outstanding technical, qualification, and experience advantages in ecological restoration and landscaping. The performance promise was 90 million yuan, 115 million yuan, 144 million yuan, and 116% of the performance promised in 2016. At the same time, the company invested 40 million yuan to hold Hon Hai Environmental Protection, mainly engaged in remote quality control of water quality monitoring equipment; invested 30 million yuan to hold Huashi Pipeline, which specializes in pipeline dredging, inspection, and repair projects; mergers and acquisitions three times three to expand PPP business in Hainan; and set up a 3 billion solid waste industry merger and acquisition fund to provide strong financial support for the company's expansion of solid waste and hazardous waste fields. Build the entire water treatment industry chain, continue to strengthen R&D investment companies with environmental management as the main line, and build a “environmental protection equipment+dredging+water treatment+ecological restoration and landscaping” water treatment industry chain. Taking advantage of the advantages of the entire water treatment industry chain, the company actively received orders. The mid-year bid was 1.12 billion yuan for urban water supply and drainage projects in Zhaoan County in 2016, 800 million yuan for the restoration of the main island marine ecological corridor in Dongtou District of Wenzhou, and 1.32 billion yuan for PPP projects such as the Zhelin Lake Ecological Environment Protection Project in Jiujiang City. The company attaches importance to technology accumulation and R&D investment. In 2016, it invested 75.43 million yuan in R&D expenses, accounting for 3.59% of revenue, and the R&D investment ratio continues to rank among the highest in the industry. Profit forecasts and investment recommendations The Zhongyi Ecological Garden Engineering sector is in a boom zone. At the same time, 2017 is the year of black and smelly river management assessment and implementation of the river length system, and the company's water treatment and ecological restoration business is expected to accelerate growth. It is estimated that in 17/18/19, the company's net profit will be 340 million yuan, 450 million yuan, and 550 million yuan respectively, and EPS will be 0.67 yuan, 0.89 yuan, and 1.09 yuan respectively. The corresponding PE will be 79, 59, and 49 times, giving it a “buy” rating. Risk warning PPP project progress risk, sewage treatment policy risk, low bid risk