Conclusions and suggestions: The company released the 2017 H1 report today, achieving revenue of 797 million yuan (YOY +49.38%) and net profit of 120 million yuan (YOY +46.52%), in line with expectations. Looking at a single quarter, the company achieved revenue of 598 million yuan and net profit of 96 million yuan (YOY +41.18%) in the 2nd quarter. The increase in performance was mainly due to the excellent performance of the seawater desalination and sponge city businesses. The company is expected to achieve net profit of 2.31 million yuan, 333 million yuan, YOY +63.70% and 44.18%, respectively, at 0.34 and 0.50 yuan, respectively. The current stock prices correspond to the 17-18 dynamic PE29X and 20X. The company's business expansion is sustainable, and future rapid growth is highly certain, and “buy” suggestions are given. Seawater desalination and sponge cities performed well: by business, the seawater desalination and sponge city business performance was impressive due to the completion of the 100,000-ton seawater desalination business in Cangzhou and the commencement of the PPP ecological project in Tai'an. The performance of the seawater desalination and sponge city business was impressive. The year-on-year growth rates reached 382.52% and 201.59%, respectively, and the gross margin increased steadily, increasing by 0.55% and 2.52% respectively. Currently, in addition to the completed Cangzhou project, the seawater desalination business also has a project framework agreement for the 100,000-ton Yingkou and Qingdao Blue Valley Seawater Desalination Industrial Park and Equipment Manufacturing Base. Furthermore, the company is actively expanding the international market through the acquisition of KWI, DHT and other companies. Currently, it is participating in the bidding for the fourth desalination plant in Singapore. In the future, some countries such as Africa, Ethiopia, and Kuwait will sign contracts one after another to carry out some Swiss water projects. Municipal projects achieved revenue of 42 million yuan, a year-on-year decrease of 71.82%, mainly due to the completion of early projects and the company's main development direction to seawater desalination and sponge cities. Gross margin increased steadily, with a slight increase of 0.09pct in the cost ratio: The financial indicators showed that the company's 17H1 consolidated gross profit margin was 33.22%, up 2.01pct from the previous year. Although the gross margin of municipal engineering fell 7.8%, overall gross margin increased due to high gross margin seawater desalination and the increase in the share of sponge city business; in terms of cost ratio, the 17H1 comprehensive cost ratio was 12.79%, a slight increase of 0.09pct over the previous year. Mainly, management expenses increased significantly in the first half of the year, and the future cost rate is expected to remain at a low level. The total number of orders in hand is 1.2 billion yuan, and future performance is guaranteed: as of June 30, 2017, the company added 76.67 million EPC orders, with a total of 153 million yuan of in-hand EPC orders at the end of the period; new BOT and business orders were 289 million yuan and 227 million yuan respectively, and BOT orders during the construction period were 100 million yuan; overall, the company's on-hand orders were close to 1.2 billion yuan, which guarantees the growth of current performance. Launch of the first phase of the employee stock ownership plan: The company announced a few days ago that the first phase of the employee stock ownership plan has already started. Recently, 1.81 million shares have been purchased at an average transaction price of 10.43 yuan/share, at a cost of 134 million yuan. The purchase limit for the entire shareholding plan is 300 million yuan. Currently, there is still room to buy 140 million yuan, and it is expected that holdings will continue to increase in the future. The industry in which the company is located will have high growth in the next 1-2 years: the company's business focuses on seawater desalination and sponge cities. By the end of 2015, China's seawater desalination scale had reached 1.03 million tons/day, only 1.2% of the world scale of 10,000 tons/day. Currently, 2/3 of China's seawater desalination is used for industry, concentrated in coastal provinces where water prices are high. It is expected that the 13th Five-Year Plan will reach a critical point of explosion. The first two batches of pilot cities for sponge cities are progressing smoothly, and the third batch of cities is about to be launched. According to the Ministry of Housing and Construction, by 2020, the area above the built-up area of the city will meet the target requirements; by 2030, more than 80% of the built-up area of the city will meet the target requirements, and the overall market size will exceed trillion dollars. With leading technology and project experience, the company is expected to fully enjoy the benefits of the industry explosion and achieve rapid development. Profit forecast: The company is expected to achieve net profit of 2.31 million yuan, 333 million yuan, YOY +63.70%, EPS is 0.34 and 0.50 yuan respectively. The current stock price corresponds to the 17-18 dynamic PE29X, the company's business expansion is sustainable, future rapid growth is highly certain, and “buy” suggestions are given, and the target price is 12.0 yuan (2018 dynamic PE24X).