Matters: In 2017, the company achieved operating income of 2,565 billion yuan, an increase of 69.10% over the previous year; realized net profit attributable to shareholders of listed companies of 244 million yuan, an increase of 74.96% over the previous year; and earnings per share of 0.98 yuan, an increase of 71.67% over the previous year. The company plans to distribute a cash dividend of 1 yuan (tax included) for every 10 shares to all shareholders, while also using capital reserves to increase 6 shares. At the same time, the company released the 2018 financial budget report. It is estimated that the company expects to achieve operating income of 4 billion yuan (+55.92% year-on-year) and net profit of 368 million yuan (+50.7% year-on-year) in 2018. The entire garden industry chain is laid out, and the business in East China and North China regions is growing rapidly. The company has achieved the layout of the entire garden industry chain. The business mainly consists of engineering construction, landscape design and garden maintenance business. In 2017, the company achieved revenue of 2,565 billion yuan, of which the garden engineering business revenue was 2,495 billion yuan, accounting for 97.25%; landscape design business revenue was 48 million yuan, accounting for 2.43%; and garden maintenance business was 0.08 billion yuan, accounting for 0.32%. From a regional perspective, East China achieved revenue of 330 million yuan, an increase of 157.84%; North China achieved revenue of 190 million yuan, an increase of 131.73% over the previous year; and the South China region accounted for a large share of business, achieving revenue of 652 million yuan, 557 million yuan, and 473 million yuan, respectively, accounting for 25.41%, 21.72%, and 18.44%, respectively. Expenses continued to decline during the period, and profitability increased steadily. The company's gross margin continued to decline due to “business change and increase” in the construction industry. The company's gross margin in 2015-2017 was 25.37%, 20.87%, and 18.77%, respectively. However, due to the decline in the company's expenses rate year by year, the company's net profit margin increased steadily. The company's expenses for the period 2015-2017 were 9.04%, 8.25%, and 6.20%, respectively, and the company's net interest rates were 9.27%, 9.20%, and 9.52%, respectively. Judging from the business structure, the company has signed a large number of new orders for EPC and PPP business, and the gross margin of the EPC and PPP business is high. As the share of PPP+EPC projects increases, the company's gross margin is expected to stop falling and pick up. At the same time, the company size effect will lead to a further reduction in the cost ratio during the period, thereby increasing the company's profitability. The balance ratio is low, and the overall cash flow is manageable. As of the end of 2017, the company's balance ratio was 43.98%, which is basically the same as in 2016. The company completed net allotment financing of 822 million yuan in the first quarter of 2018. The company's balance ratio is expected to fall to about 34% in the first quarter of 2018, and the company's balance ratio is at a low level in the industry. In terms of cash flow, in 2015-2017, the company's net operating cash flow was -274 million yuan, 77 million yuan, and -129 million yuan. The net investment cash flow was -16 million yuan, -46 million yuan, and -129 million yuan respectively. The company's operational+investment net cash flow is related to the company's growth acceleration. Considering the company's net IPO fundraising of 465 million yuan and net placement of 822 million yuan, the company's overall cash flow is manageable. The PPP+EPC project was strengthened, and the company's performance was released at an accelerated pace. In 2016, the company actively laid out EPC and PPP projects. The municipal garden business grew rapidly, and the share of the business increased rapidly, and the company's performance was released at an accelerated pace. In 2017, the company's operating income increased by 69.10% year on year, and the growth rate was 24.05 percentage points higher than in 2016; net profit attributable to shareholders of the parent company increased by 74.96% year on year, and the growth rate was 30.96 percentage points higher than in 2016. By the end of 2017, the company had signed outstanding orders of 4.844 billion yuan (including 4.540 billion yuan for engineering orders and 304 million yuan for design orders) and won unsigned orders of 1.102 billion yuan. The total of these two was 5.946 billion yuan, 2.32 times the operating income in 2017, which contributed to the achievement of the company's 50% net profit growth target in 2018. With the addition of ecological and environmental protection projects, municipal tourism is worth looking forward to. Judging from the disclosure of the company's annual report, the company will seize development opportunities in ecological and environmental protection, infrastructure construction, tourism resource planning, construction and operation. The PPP business model will utilize the brands, operational capabilities, and financing capabilities of listed companies to vigorously develop PPP business in ecological and environmental protection, municipal tourism, etc. by strengthening R&D efforts, introducing social resources, and implementing strategic cooperation. According to the company's annual report, on the one hand, the company boosts endogenous growth momentum through research and development; on the other hand, the company uses external cooperation and strategic mergers and acquisitions to achieve development by leveraging strength and extension. Investment advice: Maintain a buy-A investment rating, with a target price of 20.4 yuan for 6 months. According to the company's 2018 business plan and the company's order situation, we raised the company's performance estimate. It is estimated that the company's operating income in 2018-2020 was 3,976 billion yuan, 5.567 billion yuan, and 7.237 billion yuan, respectively, up 55%, 40%, and 30% year-on-year; EPS was 1.20 yuan, 1.74 yuan, 2.25 yuan, and dynamic PE was 13.9 times, 9.6 times and 7.4 times, respectively. The company is a “small but beautiful” garden target. The order-to-revenue ratio and cash income are relatively high, and the certainty of performance is strong. At the same time, the company will actively lay out ecological and environmental protection and municipal tourism through epitaxial expansion to expand the industrial chain. The company is expected to grow into a “dark horse” in the garden industry. “Maintain the company” buy-A investment rating, with a target price of 20.4 yuan. Risk Warning: Risks such as PPP policy changes, rising interest rates, slow order execution, and performance falling short of expectations