Incident: Dongxu Blue Sky released its 2017 performance forecast on the evening of January 29, 2018. Compared with the net profit of 175 million yuan in 2016, Dongxu Blue Sky expects to achieve net vested profit of 535 million yuan to 600 million yuan in 2017, an increase of 205% to 242% over the previous year. Comment: 1. Net profit attributable in 2017 increased by more than 200% year-on-year, mainly due to the rapid expansion of the new energy and environmental protection business. In 2017, the company's revenue and performance are expected to grow significantly. On the one hand, this is because in the company's new energy business, the capacity of photovoltaic units operated and put into operation has increased dramatically, and PV operating performance has increased rapidly. At the same time, the EPC performance of photovoltaic projects has also improved rapidly, contributing to the increase in revenue and profit in 2017. On the other hand, the company won many PPP orders in the newly expanded environmental protection sector in 2017, and the project was gradually implemented and revenue was confirmed, adding to the company's growth. Overall, the company is growing fast, but the growth rate is largely in line with our expectations. 2. PPP orders in 2017 were frequently collected, laying a good foundation for performance growth from 2018 to 2020. Recently, with the strengthening of marketing efforts in environmental protection and related sectors, Dongxu Blue Sky recently gained a lot in the field of ecology and environmental protection and related PPP. In addition to the 2.7 billion yuan on-hand order announced at the time of Starview Ecology's acquisition, Dongxu Blue Sky also frequently signed framework agreements or won bids for PPP projects in the PPP field from June 2017 to January 2018. The main winning orders include: On August 17, 2017, the company announced that it won the PPP project for the Jinquan River landscape upgrading and renovation project in Zhaoyuan City, Shandong Province, with a cooperation scale of approximately RMB 1.05 billion. On December 8, 2017, the company won the bid for the “One Water, Two Pollution” PPP project in Mojiang County, Yunnan Province, with a project scale of about 530 million yuan. On December 14, 2017, the company won the bid for the Dunhua City New Urbanization Aquatic Ecological Renovation and Upgrading Demonstration PPP Project, with a scale of about 380 million yuan. On January 30, 2018, the company won the bid for the PPP project of the Modern Agriculture Demonstration Park in Qilin District, Qujing City, with a scale of about 1.18 billion yuan. On January 31, 2018, the company won the bid for the Jabala Tujia Pastoral Complex Ecotourism Poverty Alleviation PPP Project in Longshan County, with a scale of about 1.01 billion yuan. On February 1, 2018, the company won the bid for the Yongsheng County PPP project to improve the living environment, with a scale of 1,853 billion. Currently, the total number of outstanding bid+framework PPP orders announced by the company is approximately 18.63 billion yuan (not including the 6.5 billion yuan PPP framework agreement in Xingtai City, Hebei Province, which may partially coincide). In addition to projects that have already won the bid, the framework agreement will also be successively converted into actual orders and finally fulfilled after experiencing early project planning, two evaluations, and one case. 3. Placing up the real estate sector. Future environmental protection complex projects will not be affected. On December 19, 2017, Dongxu Blue Sky announced plans to divest the original real estate business assets. Main content of the announcement: In order to concentrate resources to further cultivate new energy and ecological environmental protection business, seize historical opportunities to participate in the construction of a beautiful China, and ensure that performance enters the fast track of rapid growth, Dongxu Blue Sky New Energy Co., Ltd. and its wholly-owned subsidiary Dongxu Hongji Real Estate Group Co., Ltd. intend to sign an “Asset Transfer Agreement” with Tibet Xuri Capital Management Co., Ltd. to transfer all of the company's real estate business assets and equity to Xuri Capital. The total transaction consideration is 2134.4741 million yuan. Comment: The divestiture of the real estate sector is expected to achieve a certain premium income. In addition to this, the transaction will help the company to further focus on its main business, promote the rapid development and performance of the ecological environment and new energy industry, reduce financial expenses, reduce the balance ratio, and enhance the company's core competitiveness. 4. Profit Forecast and Investment Proposals Judging from the company's recent business developments, the company's strategic layout as a comprehensive service provider for environmental protection and new energy sources is becoming increasingly clear, and the synergy between green energy and green environment will gradually become apparent in the future. In the short term, on the one hand, the company's environmental protection business has been stepped up. The PPP project has gained a lot recently, and the early framework agreement has gradually begun to be implemented as a winning order. At the same time, the company's outreach expansion continues to gain strength, and mergers and acquisitions are entering the hazardous waste treatment business and rural sewage treatment business; on the other hand, the company's original photovoltaic and new energy business continues to advance. Overall, the business has blossomed and expanded strongly into the environmental protection sector, and collaborative changes in the business layout have also contributed to the rapid growth of the company's performance. Assuming that Starview Ecology's 2017 to 2019 new environmental PPP (and non-PPP) contract amounts are expected to be reached, respectively, at 6 billion yuan, 7 billion yuan, and 8 billion yuan, respectively. The total amount of newly signed PPP contracts is assumed to be 8 billion yuan, 10 billion yuan, and 12 billion yuan; in traditional business, the grid-connected scale of photovoltaic power plants in 2017-2019 is 500 MW, 1000 MW, and 1200 MW, respectively. Other businesses are developing steadily. Based on the above assumptions, and without considering the one-time investment income brought by the real estate sector, we expect the company to achieve net income without deduction of 570 million yuan, 900 million yuan, and 2.04 billion yuan respectively in 2017-2019, with a compound growth rate of more than 100% over the next three years. If we consider the increase in one-time investment income in 2018 brought about by the real estate sector, we expect the company to achieve net income without deduction of about 570 million yuan, 19.01 billion yuan, and 2.04 billion yuan respectively in 2017-2019. Considering that the company has now entered the fast track of development, the increase in orders and business growth will gradually be realized. The rapid growth in new PPP orders in 2017 reflects the strong execution of the company's management team, and after the synergy effects of the business sector became apparent, there is greater potential for future growth. Given the high growth in the company's performance, it was given a “Highly Recommended - A” rating. 5. Risk warning: Construction, grid connection, and settlement progress falls short of expectations, PV subsidies have been lowered, and the environmental protection market has fallen short of expectations.