Investment highlights: In 2017, net profit from the mother increased by 184.45%-212.46% year on year. The company released its 2017 performance forecast and is expected to achieve net profit of 132-145 million yuan, +184.45%-212.46% over the same period last year. The company actively promotes high-efficiency power generation technology with steam turbines as the core, complete power island projects, and power generation project turnkey projects. Projects in various fields have developed smoothly, which has promoted performance growth. We believe that the performance is in line with expectations, that the company has mastered the core technology, and that the project is expanding smoothly. It is expected that biomass power generation and agricultural environmental protection industrial parks will develop rapidly in the future. The acquisition of Shanghai Yunneng is expected to have a synergistic effect. According to the company's restructuring plan, the company plans to issue shares to buy 100% of Shanghai Yunneng's shares at a total price of 785 million yuan. Shanghai Yunneng is deeply involved in energy saving and environmental protection equipment, mainly providing energy-saving and environmentally friendly boiler manufacturing services, and is a deep partner of the company. Shanghai Yunneng's performance promise for the year 17-19 was not less than 5,100/7650/95 million yuan, respectively. As of mid-December '17, the total amount of contract execution contracts in progress exceeded 2 billion yuan, 28 potential projects (negotiated projects), and the estimated total contract amount reached 3.4 billion yuan. We believe that Shanghai Yunneng has high-end boiler manufacturing capabilities and various qualifications, has sufficient orders, and has a high probability of fulfilling performance promises. We look forward to forming a synergy with the company in the future. The country attaches importance to biomass gasification, and the Gaoyou project helps the company develop. At the end of '17, the National Development and Reform Commission, the Energy Administration and other departments issued “Guiding Opinions on Promoting the Development of Biomass Energy Heating” and “Guiding Opinions on Carrying Out Construction of Straw Gasification Clean Energy Utilization Projects”, which vigorously promoted the clean utilization of straw gasification (China Energy News). The company's Gaoyou biomass straw gasification project was successfully connected to the grid to generate electricity in September '17. The process route is biomass molding fuel gasification. According to the development goals of the “13th Five-Year Plan for Biomass Energy Development”, the annual utilization of biomass molding fuel in China will reach 30 million tons in 2020, and about 8 million tons in 2015. There is still plenty of room. We believe that the company can take advantage of Dongfeng to welcome development opportunities. On February 3, the Gaoyou Project gave a special report at the Biomass Application Seminar, which received positive recognition from experts (Securities Times). Seizing the pain points, try agricultural and environmental protection industrial parks first. Rural waste treatment has always been a pain point in rural environmental management. Relying on the successful experience and equipment advantages of the Gaoyou project, the company proposed a new model for agricultural environmental protection industrial parks: assisting the government in solving problems such as organic biological waste — straw, garbage, livestock and poultry manure, etc., and using biomass energy coupling to achieve a five-point supply of electricity/steam/heat/compound fertilizer/tar. On February 3, the company signed a cooperation framework agreement with Anda City in Heilongjiang. We believe that benefiting from environmental warming and the continuous advancement of environmental management, the agricultural and environmental protection industrial park model can effectively seize the government's environmental protection pain points without increasing the government's financial burden. It can become one of the potentially important grippers in the rural revitalization strategy, or it may be tried first. The future is worth looking forward to. Profitability and valuation. We expect the company's EPS in 17-19 to be 0.24/0.42/0.64 yuan (not considering additional issues). If additional distribution is considered, the EPS preparation for the 17-19 exam will be 0.29/0.49/0.71 yuan, corresponding to PE valuation of 47/28/19 times. The additional distribution is expected to be completed in 2018. We believe that the company has mastered high-end core technology and is a leader in energy saving and environmental protection and import substitution. The innovative model of agricultural and environmental protection industrial parks is worth looking forward to. It continues to benefit from environmental upgrades, and is also in line with the rural revitalization strategy. Performance is expected to achieve rapid growth. The average annual growth rate of the company's performance is expected to be 56% after the increase in sales in 17-19. Comprehensive considerations give the company a PE valuation of 35 times (PEG=0.6). The target price is 17.15 yuan, maintaining the “buy” rating. Risk warning. The restructuring failed; orders fell short of expectations; and market expansion fell short of expectations.