I. Overview of events:

Recently, we have communicated with the management of the company on the operation and development strategy of the company.

Second, analysis and judgment:

Adopt the strategy of "differentiation" and "regionalization" to increase the development of overseas infrastructure market since the beginning of this year, the company announced that the total amount of bid-winning projects is 3.465 billion yuan, which has exceeded the winning bid for the whole year of 15 years (2.527 billion). The company's 15-year operating income was 1.445 billion yuan, down 3.54% from the same period last year, and the net profit was 18.74 million yuan, down 86.41% from the same period last year. Due to the decline in revenue due to understart of the 15-year project, the company's gross profit margin decreased by 4 percentage points to 12.07% due to the reduction of high gross margin BT projects, and the loss of 94.25 million yuan in bad debt impairment led to a sharp decline in the company's net profit.

In the first half of this year, supported by the policy of steady growth, infrastructure projects in the central and western regions started intensively, and the company will continue to adopt "differentiation" and "regionalization" strategies to actively expand business areas and project sources, focus on the development of regional markets such as inter-city express lanes, urban municipal construction, and Tibetan highways, and strive to promote PPP projects. With the formulation and promotion of the national "Belt and Road" strategy, the company will also increase the development of overseas markets, increase the intensity and breadth of cooperation with super-large construction enterprises, and strive to make a breakthrough in overseas markets in 2016.

Set up M & A fund and formulate the strategic goal of "one master and multiple"

The company announced in January 16 that it intends to subscribe for the limited partnership share of Shenzhen Huayi Chenglu Investment Partnership at RMB 250 million, which mainly invests in industries related to big health, medical treatment and consumption or healthy living, including equity of listed and unlisted companies and other rights and interests. This investment can broaden the investment channels for the company in the future, promote the company's extension development, and achieve the company's strategic goal of diversification. The general trend of the construction industry is downward, and the competition from central enterprises and local state-owned enterprises is becoming more and more fierce. under the premise of strengthening the main business, the company will flexibly carry out mergers and acquisitions and diversification through a variety of ways around the direction of "big consumption and great health". Promote the extension development of the company.

The new major shareholders have little influence on the operation and development of the company.

From August 15 to February 16, Li Qin bought 20% of the company's shares in the secondary market and became a major shareholder of the company, but we believe that the new major shareholders will not affect the changes in the membership of the company's board of directors and the company's business development.

Although the limited movement of the original actual controller has a limited impact on the normal operation of the company at present, it will still have a certain impact on the strategic direction of the company's future development.

Third, profit forecast and investment suggestions

Since the beginning of this year, the amount of the winning project of the company has exceeded that of the whole of last year, and the steady growth policy will continue to help the company turn the winning project into performance, and the company will adopt the strategy of "differentiation" and "regionalization" to increase the development of overseas markets. at the same time, it will carry out extension development around the direction of "big consumption and great health", but the limited action of the company's actual controller will affect the promotion of the company's development strategy to a certain extent. It is estimated that the company's net profit from 2016 to 2018 is 81 million, 105 million and 134 million respectively, and the EPS is 0.11,0.14 and 0.18 yuan respectively, corresponding to 61 times, 47 times and 37 times of the current PE, respectively.

Fourth, risk hints: the progress of the project is slow, and the company's extension development lags behind.