Incident Company Announces 2017 Three-Quarter Report The Company announced its 2017 three-quarter report, achieving operating income of 914 million yuan, a year-on-year increase of 2976%; net profit of 144 million yuan, a year-on-year increase of 550.27%; and EPS of 0.21 yuan/share, ROE of 4.54%. Among them, in the third quarter, the company achieved operating income of 436 million yuan, an increase of 122242% over the previous year, and realized net profit of 42.94 million yuan, an increase of 353.38% over the previous year. A brief review of the performance of the first three quarters is close to the forecast limit. Financial indicators show that the business acceleration and expansion company released the 2017 third quarter results forecast on October 14, 2017, announcing that it is expected to achieve net profit of 110 million yuan to 150 million yuan for the first three quarters of 2017. The results announced in this three-quarter report were 144 million yuan, an increase of 550.27% over the previous year. It is close to the forecast limit. It can be seen that the company's overall profit situation is relatively good. In the first three quarters, the company's operating income and net profit increased significantly in the same period last year, mainly due to the expansion of the scope of the company's merger list and the smooth development of various businesses. It is expected that the end of the year will enter a centralized settlement period for engineering projects. At the same time, considering the expansion of mergers due to the transfer of garden assets in the North, the company's net profit in the fourth quarter will grow relatively rapidly. In terms of cash flow, the company's net operating cash flow for the first three quarters was 741 million yuan, a decrease of 442.41% from the same period last year. Mainly due to the company's business development needs, which led to the payment of upfront purchases, the cash outflow increased sharply. This also shows from the side that the company's various businesses are progressing rapidly, adding security to its performance. In terms of accounts receivable, the company's accounts receivable for the first three quarters were 803 million yuan, an increase of 119.60% over the previous year, mainly due to an increase in accounts receivable from the garden business; in terms of prepayments, the company's advance payments for the first three quarters were 471 million yuan, an increase of 342.27% over the previous year, mainly due to the increase in the company's business volume and the increase in prepayments related to production and operation, which also reflects the accelerated expansion of the company's related business. The acquisition of North Garden had immediate results. The related business is expected to gain momentum. Recently, Jinglan North Garden, a subsidiary of the company, won the bid for the fourth phase of the Weifang High-tech Zone Government and Social Capital Cooperation (PPP) project in the form of a consortium. The total investment of the project is estimated at 998 million yuan. In February 2017, the company announced that it would acquire 90.11% of Beifang Garden's shares through a transaction consideration of 721 million yuan, including $192 million in cash consideration and $529 million in consideration for issued shares. The matter was conditionally approved by the Securities Regulatory Commission on June 1, and the asset transfer was completed on September 15, demonstrating the high efficiency of resource integration. One month after the transfer, it was announced that it had won the bid for a large-scale municipal PPP project. Continued efforts can be expected in the future. The three major layouts have been implemented. The “big ecology” pattern now relies on unique resource advantages, and the company quickly completed the expansion of the industrial chain through the “three-step” strategy in a short period of time. The “big ecology” industrial pattern supported by “agricultural water saving,” “Internet +,” and “ecological restoration” has emerged. 1) In terms of “agricultural water saving”, through mergers and acquisitions, Muhe saves water, and enjoys industry development dividends as a leader; 2) On the “Internet +” side, the ecological industry is fully integrated with the Internet, and actively explores the use of the Internet platform model to promote the construction and operation of ecological projects and enhance the added value of the industry; 3) In terms of “ecological restoration,” the company rapidly expanded its business chain through the acquisition of Northern Gardens, and another important pillar in the industrial layout. A number of policies continue to be favorable, and the agricultural water-saving business is gaining momentum. The “13th Five-Year Plan for Water Resources Reform and Development” proposes adding 30 million mu of effective farmland irrigation area and 100 million mu of efficient water-saving irrigation area. According to the estimate of an investment of 2,500 yuan/mu for efficient water-saving irrigation, the water-saving market space will exceed 250 billion yuan by 2020, with broad development prospects. The “Opinions on Promoting the Comprehensive Reform of Agricultural Water Prices” suggests that it will take about 10 years to establish and improve the agricultural water price formation mechanism. The increase in water prices will force farmers to control water expenses from a cost perspective, adopt water-saving technology, and increase the area for water-saving irrigation. Since 2016, agricultural water-saving irrigation PPP projects have been implemented at an accelerated pace, and the number and scale have increased rapidly. PPP has brought two changes to the industry: 1) the scale of project investment is large, and the comprehensive capacity requirements of enterprises are higher; 2) increasing farmers' participation and raising awareness of water conservation. In the context of the rapid advancement of the PPP model, the “small, scattered, and chaotic” situation of industry competition in the past will completely change, industry concentration will increase rapidly, and the company is directly benefiting as a leading representative of the industry. Up to now, the company has signed a 15.7 billion framework agreement. Among them, projects such as Julu County in Hebei, Hulunbuir Agricultural Reclamation Group, Weixian County in Xingtai, Hebei, Liangcheng County, and Toktor County in Inner Mongolia have begun to be converted into formal orders, and there is strong certainty about the accelerated release of performance. Entering the clean energy sector, Jinglan Energy Technology is expected to become another performance growth point in terms of clean energy. The company has entered the clean energy service field through the establishment of Jinglan Energy Technology. The management team of Jinglan Energy Technology has rich industry experience, quickly obtained superior technology through domestic and foreign cooperation, and undertook a number of industrial energy saving projects in a short period of time, involving various fields such as waste heat and power generation, industrial exhaust, dry coking, energy control, and chemical industry upgrading, with a total amount of 1,131 billion yuan, showing the management team's excellent management ability and order handling efficiency. The clean energy sector is expected to become a new profit growth point for the company. Using capital operations, we actively lay out industrial investment through enterprise-level innovation incubators to cultivate high-quality entrepreneurial projects and technology in vitro to provide listed companies with good talent and project reserves; in addition, the company actively builds a comprehensive business platform for ecological industry investment, construction, operation and management, and establishes the Jinglan Jianxin Industry Fund to provide strong financial guarantees for PPP projects. The management of investment advice and rating companies has high-quality management capabilities and strong resource endowments, showing strong advantages in capital operation and order execution; the “big ecosystem” industrial pattern has initially appeared, and is expected to become a scarce leader in the future; the recent increase in shareholders' holdings has further demonstrated confidence in development, and the inflection point of rapid performance growth has arrived. The company is expected to achieve operating income of 4.241 billion yuan and 6.580 billion yuan in 2017 and 18, net profit of 352 million yuan and 596 million yuan respectively, and diluted EPS of 0.47 and 0.76 yuan respectively, maintaining the “buy” rating.