Matters: the company announced that: 1) the consortium of the company, "China No.1 Metallurgical" and "Jianxin Trust" has won the bid "Yongjiang Comprehensive renovation and Development and Utilization Project PPP Project", with an investment of 1.23 billion yuan. 2) the company and "Zhongjinghui Design", "Siping Municipal Survey and Design Institute", "Zhongye Tiangong" won the bid "Siping Sponge City Construction South and North River Water Environment Comprehensive renovation Project (South River Section Landscape Project) Design and Construction General contract EPC Project", with an investment of 320 million yuan.

The joint state-owned enterprises and design institutes formed a delegation to fight, and the strength enhancement project landed quickly: (1) the company signed the order and made new progress, and the consortium composed of "China first Metallurgical" and "Jianxin Trust" won the bid PPP project, with a total investment of 1.23 billion yuan, of which the company is responsible for 10% of the construction and security projects and 10% of the shares. (2) the project won the bid in July, and in July, the company joined two major design institutes and "Zhongye Tiangong" in advance of the "Siping Sponge City Construction South and North River Water Environment Comprehensive renovation Project Design and Construction General contract EPC Project" landed with a total investment of 320 million yuan. "China first Metallurgical" and "China Metallurgical Tiangong" are subsidiaries of the state-owned enterprise "China Metallurgical". The United Nations Enterprise Metallurgical Department and Design Institute have significantly improved their market competitiveness, enhanced their ability to obtain orders, and the scale of orders is expected to continue to expand.

Joint local government accurate poverty alleviation, economic benefits + social benefits: on September 8, the company announced that it won the bid "poverty alleviation project of water conservancy in the north of Panxian County (Phase I)" with a total investment of 130 million yuan. On October 12, the announcement signed a cooperation framework agreement with Tongzi County, with a total investment of 3.5 billion yuan. Tongzi County is the precise counterpart of poverty alleviation in Putuo District of Shanghai, and has accumulated 760 million yuan of funds for Zunyi and the Shanghai government. The company is based on the poverty alleviation line, obtains poverty alleviation projects in conjunction with local governments, and obtains two projects in Panxian County and Tongzi County in a short time to realize the social value of the enterprise while obtaining business development. At the same time, poverty alleviation projects are generally supported by special funds, and the project returns are better.

Private enterprise PPP policy dividend may be increased, company orders sufficient to ensure performance: the National Development and Reform Commission recently issued a notice to encourage the government to use PPP and other ways to speed up investment in the construction of natural gas storage and peak shaving facilities, a new round of policies to promote PPP has also been centrally issued, and the PPP policy shows obvious signs of warming At the same time, the NDRC answered at the press center of the 19th CPC National Congress on "solving the problem that private capital cannot invest, is unwilling to invest, dare not invest, and where to invest", and expounded that the investment including the PPP model will lower the threshold for private enterprises, protect private enterprises and guide private capital to invest in areas with a long industrial chain. It is expected that the PPP market is expected to be further opened to private enterprises. From the point of view of the company's orders, since 2017, the company has announced orders (including framework agreements) totaling 6.184 billion yuan (2.684 billion yuan for orders and 3.5 billion yuan for framework), which is 7.5 times the operating income of 826 million yuan in 2016. the company has more orders on hand, and the follow-up performance is guaranteed.

Investment advice: buy-An investment rating, 6-month target price of 40 yuan. The company's United Nations enterprises, design institutes and other foreign aid groups competed to kill two birds with one stone along the poverty alleviation route, with abundant orders on hand and layout in the fields of ecological restoration and cultural tourism, including water management. it is expected to further open up the future growth space of the company. We are optimistic about the growth of the company. We expect the company's operating income to increase by 56.2%, 38.4% and 29.1% year-on-year from 2017 to 2019, while net profit will increase by 57.5%, 40.0% and 33.5% year-on-year, maintaining the company's buy-An investment rating, with a six-month target price of 40 yuan, equivalent to 40 times dynamic P / E in 2017.

Risk hint: the risk that the landing of the framework agreement is not as expected, the PPP advance is not as expected, the interest rate continues to rise and so on.