Investment highlights: It won the bid for the 1 billion sponge city PPP project in Suining, and won the second order of the first batch of sponge city construction pilot projects during the year. After winning the bid for the Hebei Qian'an Sponge City PPP project in May, the company won the second batch of the first batch of sponge city construction pilot projects in the country. The total amount has reached 2.12 billion yuan, verifying the capabilities and advantages of the company's integrated platform company for sponge city construction financing, design, construction and operation. The interim report recorded a loss, and the performance is expected to be corrected during the year. The company's 2016 H1 revenue increased 151.38% year over year, but net profit loss attributable to shareholders of listed companies increased 8.57% year over year. At the same time, it is predicted that January-September will still record losses. We judge that up to now the sponge city construction business has not contributed significant performance to the company. According to the convention of confirming a peak revenue period for construction projects from the fourth quarter to the end of the year, and the related costs and expenses have already been reflected in advance, we expect the net profit attributable to the company to be corrected by the end of the year. The fixed increase plan has been adjusted, and the direction of investment in sponge cities has become more clear. The company has adjusted its non-public offering plan, adjusted the amount raised, distribution target, issue price, fundraising direction, etc., and the announcement has been accepted by the Securities Regulatory Commission. We believe that the adjusted distribution plan has better feasibility and a more clear investment direction, and has also improved the layout of the company's sponge city industrial chain. It is expected that in the future, it will form the entire sponge city project industry chain and full life cycle financing+construction+operation capabilities. Profit forecast and investment rating: We are optimistic that the company, as a scarce platform for the entire industry chain in the field of sponge city construction, with professional design institutes as the core, has taken the lead with advantages such as industry position, technology leadership, and capital operation, and continues to increase its ability to track and contract sponge city projects. The annual performance is expected to improve by speeding up the execution of new orders to revenue. As a precautionary measure, we have not yet considered the impact of the company's non-public offering factors. We predict that the company's 2016-2018 EPS will be 0.08, 0.16, and 0.31 yuan respectively. The current stock price corresponding to the price-earnings ratio is 128.74, 63.07, and 32.39 times, respectively, maintaining the “increase in holdings” rating. Risk warning: risk of large macroeconomic fluctuations, risk of sponge city construction not progressing as expected, risk of PPP model not progressing as expected, risk of company undertaking sponge city projects not meeting expectations, risk of Qian'an and Suining projects not progressing as expected, risk that the company's non-public offering plan will not pass, etc.