The 2017 performance was slightly better than expected. The low debt ratio increased the business underwriting space company achieved revenue of 2,565 billion yuan in 2017, an increase of 69.1% over the previous year; realized net profit of 244 million yuan, an increase of 75.0% year-on-year (78.8% year-on-year increase after deduction), slightly better than our expectations. Benefiting from increases in net interest rates and asset turnover, the company's weighted RoE increased sharply by 6.6 pct to 18.25% year over year. The balance ratio of the company is expected to fall to 34% after the completion of the allotment of shares, which is significantly lower than that of its peers at 61%. The profit forecast for 18-19 was raised, and the rating was raised to “buy.” The municipal business accounts for more than half, and the order revenue ratio is more than 2 times. According to the company's allotment feedback, the municipal engineering construction and landscape design business has increased year by year in recent years. For the first time, the company's 2017 H1 municipal garden revenue accounted for more than half, reaching 57.7%. Moreover, the company's 2017 report revealed that the number of municipal orders has exceeded the number of real estate business orders. As the company vigorously develops PPP/EPC business, we expect the share of municipal business to increase further, which is conducive to expanding the company's revenue scale and smoothing the impact of fluctuations in real estate investment on the company's revenue. In 2017, the company's revenue from Evergrande Real Estate and related enterprises accounted for 34% of the annual revenue, similar to previous years. The major customer strategy promoted the steady growth of the company's real estate and garden business. The company signed new orders of 4,549 billion yuan in 2017, an increase of 118% over the previous year, and orders in hand at the end of the year were 5.946 billion yuan, 2.32 times the revenue in 2017. The reduction in the cost ratio increased the net interest rate, and the return on net assets rose sharply in 2017. Affected by the rise in raw materials and labor costs, the company's comprehensive gross margin decreased by 2.1 pct to 18.77% year on year, but the net profit margin increased by 0.3 pct to 9.52% year on year, mainly benefiting from the reduction in the cost ratio. The company's period expense ratio was 6.20%, down 2.1pct from the previous year. Among them, the management fee rate decreased by 1.8 pct to 5.23%, and the financial expenses rate decreased by 0.2 pct to 0.97%. The total asset turnover ratio fell below 1 for three consecutive years, reaching 1.06. The increase in net interest rate and asset turnover ratio drove the company's weighted ROE in 2017 to a sharp increase of 6.6 pct year-on-year, to 18.25%. The net outflow of operating cash increased, and the completion of allotments further reduced the debt ratio. As the number of large and medium-sized municipal engineering projects undertaken by the company increased, installment receipts for EPC projects and PPP capital investment both increased the company's capital requirements. In 2017, the company's earnings ratio was 61.77%, a decrease of 19.8 pct over the previous year, resulting in a net operating cash outflow of 129 million yuan. The company's balance ratio at the end of 2017 was 43.98%, up 0.5 pct year on year. In April 2018, the company completed the placement of 3 shares for every 10 shares at a price of 11.50 yuan, raised 822 million yuan in net capital, and added 73 million new listed shares. It is expected that the company's balance ratio will be further reduced by about 10.3 pct. SW Garden's balance ratio in 2017 was 61%. The company's lower balance ratio than that of peers opens up space for expanding EPC/PPP projects. Optimistic about the low debt ratio and undervaluation, the profit forecast was raised and the rating was raised to “buy”. According to the company's 2018 financial budget, the company expects to achieve revenue of 4 billion yuan and net profit of 368 million yuan. Based on the company's ongoing orders, we raised the 2018-19 performance forecast to 387/576 million yuan (original forecast of 318/430 million yuan) and introduced a 2020 performance forecast of 784 million yuan. The corresponding diluted EPS after allotment of shares was 1.21, 1.80, and 2.44 yuan. Currently, the average PE value and median value of comparable garden companies in 2018 is 15.97 or 15.60 times. Approval was given to the company in 2018 for 16-19xPE, corresponding to the target price range of 19.36-22.99 yuan, and the rating was upgraded to “buy”. Risk warning: slow implementation of PPP projects, investment risks in new fields of ecological and cultural tourism, etc.