The company recently announced its first-quarter results forecast, acquisition of Zhejiang Yongqi Lighting, and participation in Shenzhen Guangcai Lighting. Our comments are as follows: the acquisition of Yongqi Lighting, participation in Guangcai Lighting, and further integration of industry resources to strengthen and expand Yongqi Lighting is one of the few companies in the industry with double qualifications in lighting engineering. It is headquartered in Ningbo, Qingdao, Fenghua, Cixi, Xi'an and other places. The newly signed Qingdao contract alone has over 100 million dollars, and is very popular among owners. The company used 247.5 million dollars in cash to acquire 55% of its shares, corresponding to a price-earnings ratio of 9 times the 2018 profit promise, which can effectively increase the company's EPS. Yongqi Lighting promises a profit of no less than 50, 65, or 85 million yuan in 2018-2020, an increase of 15%, 30% and 31% over the previous year. The announcement also stipulated that the counterparty should purchase the company's shares through the secondary market or other means within 6 months after obtaining the equity transfer payment. The purchase amount should not be less than 70% of the share transfer amount. This move also shows the confidence of both parties to the transaction in the future development of the company. At the same time, the company invested 11.1 million yuan through equity transfers and capital increases to obtain 30% of Shenzhen's shares in Guangcai Mingzhou. The company also has a double qualification in lighting engineering. Through these two acquisitions and shareholding, the company has further integrated the qualified resources within the industry, and market concentration will increase; at the same time, it will implement the company's national regionalization strategy and greatly increase the market share of the company's business in East China. The performance forecast for the first quarter is 50%-80%, and the rapid growth is in line with expectations. The company's net profit for the first quarter of 2018 is expected to be 3024-36.29 million yuan, an increase of 50%-80% over the previous year, in line with our expectations. Benefiting from the high level of prosperity in the landscape lighting industry, the company has maintained rapid growth since its listing. This year is the third year of rapid growth. According to the company announcement, the company has successively signed a total of about 5,419 billion yuan of lighting project construction contracts and framework agreements with government agencies such as Hanzhong in Sichuan, Yumen in Gansu Province, and Lu'an in Anhui Province, which is 7.1 times its revenue in 2017; the company's fixed increase of no more than 880 million yuan was approved by the Securities Regulatory Commission in December last year, and its capital strength will be further consolidated if it is successfully issued. We expect the company's performance to continue to grow rapidly. Major events continue to drive investment in landscape lighting, and the establishment of the Qingdao branch to meet the dividends of the summit order After the 2016 Hangzhou G20 summit, major events will continue to drive lighting-related investments: 2018 will be the 40th anniversary of the reform and opening up, the 60th anniversary of the founding of Ningxia and Guangxi Autonomous Region, the Hainan Boao Forum, the Qingdao SCO Summit, and the first China International Import Expo in Shanghai; 2019 will be the 70th anniversary of the founding of the nation, and many special economic zones will celebrate; 2020 will be the last year of the fight against poverty, which will be comprehensive Build a well-off society. The company's establishment of a branch in Qingdao, Shandong helped the company obtain and execute orders in the region. The investment suggests that this acquisition and shareholding will further integrate industry qualification resources, and market concentration is expected to increase further; under conditions where orders are sufficient and fixed increases are being implemented, it is expected that the company's high growth will continue. Considering the 17-year performance report announced by the company and the increase in EPS in 2018 and 19 due to this merger and acquisition, the original 2017-2019 EPS was adjusted from 0.62, 1.01, and 1.63 to 0.60, 1.15, and 1.83 yuan, corresponding to PE35, 18, and 11 times. The company's mergers and acquisitions have opened up extended expectations, and the quarterly performance forecast further confirmed the company's high growth. We believe there will be some room for improvement in the company's valuation, and the rating will be raised to “buy”. The target price will be raised from 24.24 to 26 yuan (corresponding to 23 times PE in 18 years). Risk warning: Project repayment falls short of expectations; merger and acquisition integration falls short of expectations; risk of not fulfilling profit promises