Event: The company released its 2017 semi-annual report. The company's revenue and net profit for the reporting period were 1,572 million yuan and 260 million yuan respectively, up 83.62% and 116.13% year-on-year respectively, in line with expectations. Key investment points: The main business is growing rapidly, but the gross profit level has declined slightly. During the reporting period, the company's revenue from ecological environment construction, environmental protection engineering and environmental protection equipment grew rapidly. The growth rates were 102.16%, 117.08%, and 140.91%, respectively, while water resources and dredging declined by 16.79%, ultimately achieving a revenue growth rate of 83.62%. The gross margin of all business segments was under pressure, falling 5.71, 3.25, 2.46, and 2 percentage points, respectively. However, there was a scale effect. Expenses were saved during the period, and the transfer of financial assets available for sale disrupted current performance. The apparent performance was eye-catching. Due to the scale effect formed by the previous layout, the company's sales expenses, management expenses, and financial expense ratios decreased by 1.08, 3.56, and 0.92 percentage points, respectively. During this period, the company confirmed that the investment share transfer income of Hangzhou Xingyuan Jujin Investment and Management Partnership was 91.25 million, which had a great impact on current performance. After deducting non-payment, the company's net profit growth rate was 63.26%, slightly lower than the revenue growth rate. It has the ability to undertake general contracting for PPP projects, continued to receive orders during the reporting period, and the original project progressed steadily. After years of mergers and acquisitions to supplement the industry chain, the company has covered a comprehensive range of vertical fields in the water treatment industry chain, making it very few environmental management providers in the market that truly have overall solutions. Moreover, the general contracting model can reduce intermediary links, which is conducive to improving overall project profit margins. During the reporting period, the company signed major contracts such as the Ningguo City Park and Green Space Construction PPP Project (415 million), the characteristic small town construction project for Tuofhan Town in Wensu County (1.25 billion), and the Shibing County Easyland Poverty Alleviation and Relocation (Poverty Alleviation Ecological Immigration) construction project (1,247 billion); the original projects have established PPP project companies in Huzhou, Linhai, Dawu, Zhangzhou, Jiujiang, Zhaoan, Taizhou, Xinchang, Wenzhou and Qiongzhong, etc., and are currently progressing smoothly. Mergers and acquisitions continue, and are deeply involved in integrated environmental and energy-saving technology providers and service providers. In 2015, the company invested in the establishment of the Xingyuan Energy Saving Subsidiary, which specializes in the comprehensive treatment and resource recovery of organic waste gas and waste liquid; holds Yinjiang Environmental Technology to obtain its manufacturing capacity for energy saving and water treatment equipment; acquires part of Shanghai Haocang's shares and increases capital to enhance the informatization capabilities of environmental protection business; and acquires Zhongyi Ecology to lay out ecological restoration and landscaping. Holding Hon Hai Environmental Protection, it focuses on serving remote quality control of water quality monitoring equipment; mergers and acquisitions are three times three, which is conducive to market development and the acquisition and implementation of PPP projects; and the Xingyuan Jujin M&A Fund has completed investment in the solid waste industry. In December '16, the company successfully issued 250 million yuan of one-year PPN, providing short-term financial support for further expansion. At the beginning of 2017, the company initiated the issuance of shares to purchase 100% of the shares of Zhejiang Yuantai Environmental Protection Technology Service Co., Ltd., with smart water management and smart environmental protection as the starting point, to provide the development and construction of IoT management and information processing cloud platforms, development and sales of sewage treatment equipment, and the underwriting and operation and maintenance services of sewage treatment projects. As a comprehensive environmental service enterprise, it is expected to connect the company's existing businesses through the platform. Currently, the Securities Regulatory Commission has accepted and provided feedback. The company promised that net profit after deduction for 17-19 will not be less than 38 million, 47 million, and 57 million, respectively. Investment ratings and valuations: A large number of PPP projects have entered the execution period. We raised the 17-18 year net profit to 5.56, 817, and 1.08 billion yuan (originally 3.74, 536 million in 17-18). The corresponding EPS was 0.55, 0.80, and 1.09 yuan/share, corresponding to the 17 and 18 valuations of 53 and 36 times. We believe that the company has successfully transformed into an environmental protection system integrator and integrated environmental management service provider through the capital platform, relying on its core environmental protection equipment strength. We expect the implementation of PPP orders to continue to accelerate and maintain the “buy” rating.