Key investment matters: The company released its 2018 semi-annual report. In the first half of the year, it achieved operating income of 4.938 billion yuan, a year-on-year increase of 76.68%, net profit of 385 million yuan, a year-on-year increase of 42.93%, and basic earnings per share of 0.17 yuan, a decrease of 5.56% over the previous year. Ping An's view: The company's performance continued to grow rapidly, and the ecological and environmental protection business performance was impressive: the company's performance in the first half of the year continued to grow rapidly. Among them, revenue for the 18Q2 single quarter and net profit from the mother increased by 79.3%/67.3% year-on-year, respectively. By sector, the ecological and environmental protection business revenue for the first half of the year was 2,321 billion yuan (YoY +147.9%), with gross margin reaching 27.2% (YoY +1.5pct); municipal garden business revenue was 1,917 billion yuan (YoY +26.1%), and gross margin reached 23.9% (y-2.34 pct). Driven by the ecological and environmental protection business, the company's comprehensive gross margin reached 26.2% in the first half of the year, an increase of 0.7 pct over the previous year. Financial deleveraging raised financing costs, and the period fee rate increased slightly: the company's expenses rate for the first half of the year was 18.0%, a slight increase of 1.4pct over the same period last year, of which: the operating expense ratio was 1.4% (+0.6pct) and the management expense rate was 11.4% (y-0.5pct); affected by financial deleveraging in the first half of 2018, the company's financing costs rose, and the financial expense rate reached 5.1% (+1.2pct year on year). With the marginal relaxation of the infrastructure financing environment in the second half of the year, the company's financial expense ratio is expected to improve. The release of orders in the first half of the year was accelerated, and improved financing will guarantee performance growth: in the first half of 2018, the cumulative amount of new contracts signed reached 11.617 billion yuan, an increase of 334% over the previous year, the cumulative amount of construction orders that have won bids and yet to be signed was 11.361 billion yuan, an increase of 166% over the previous year. As of 18H1, the amount of unfinished orders signed by 18H1 reached 407.1 billion yuan, an increase of 136% over the previous year. Since the end of July 2018, the central government has clearly stated “adhering to an active fiscal policy and increasing efforts to repair shortcomings in the infrastructure sector”. Banks will increase credit investment in the second half of the year, and the environmental management/rural revitalization sector will continue to benefit. The financing of the company's ecological garden PPP projects is expected to improve, which will facilitate the progress of the company's projects and guarantee the company's annual performance growth. Profit forecast and investment suggestions: The company has sufficient PPP orders for ecological gardens. As the financing environment for ecological and environmental protection projects continues to improve in the second half of the year, the PPP projects signed by the company will advance at an accelerated pace, and the performance in the second half of the year is expected to be released at an accelerated pace. Maintain the company's 2018-2020 net profit forecasts of 1,089 million yuan, 1,491 million yuan and 1,937 billion yuan, and EPS forecasts of 0.48 yuan, 0.65 yuan and 0.85 yuan, corresponding to current PE of 11.2 times, 8.2 times and 6.3 times, respectively, maintaining the “recommended” rating. Risk warning: Project execution falls short of expectations due to the increase in financing costs and the slowdown in financing progress: More than 80% of the company's newly signed projects use the PPP model. If the financing costs of PPP projects continue to rise and the financing progress slows down in the future, it will cause the company's project execution to fall short of expectations and affect the company's revenue growth; accounts receivable risk: the company's accounts receivable are large. If the company cannot recover them in a timely manner in the future, it will have a negative impact on the company's performance; as PPP supervision policies continue to become stricter, project execution falls short of expectations: due to the continuous tightening of PPP regulatory policies, some of the company since '18 The PPP project has been suspended and rectified. If future policies continue to be strengthened and project implementation time slows down, it will adversely affect the company's 2018 performance.