Event: The company released its 2018 semi-annual report on 2018.8.17. In the first half of 2018, the company achieved operating income of 342 million yuan, an increase of 429.99% over the previous year, and realized net profit of 25 million yuan to mother, an increase of 90.7% over the previous year. Among them, Q2 revenue increased 317.89% year over year, net profit to mother increased by 21.85% year on year, and deducted non-return income increased 91.5% year over year. Opinions: 1. The leading garden design company uses the momentum to broaden the industrial chain and drive significant growth in performance as expected. The company is a well-known garden design enterprise. It is one of the first batch of special grade A qualified enterprises for garden design in the country. Representative achievements include the West Lake and Xixi Comprehensive Protection Project, supporting facility landscape renovation projects for major conferences such as the G20 Hangzhou Summit, the “Xiamen BRICS Leaders' Summit” and the “Hainan Boao Forum for Asia”, leading the development of the industry and receiving wide social recognition; the company is committed to broadening the industry chain downstream and taking advantage of the opportunity of the Boao Forum to undertake EPC projects in a big way. In 2017, the company proposed a two-wheel drive development strategy for “design and ecological environment business”. While consolidating the advantages of traditional design business, the company leverages the leading position of design in the industrial chain and actively expands the EPC business. The 2018 Annual Meeting of the Boao Forum for Asia was held in 2018.4. Seizing market opportunities, the company continuously undertook EPC projects for the construction and landscape renovation of the three major parks in Boao from 2017.9-2018.2, including 295 million agricultural national park construction projects, which strongly implemented the company's strategy of expanding from “design” to “general contracting”; currently, the company has plenty of orders, and EPC orders have benefited from the holding of the Boao Forum annual meeting and were released rapidly, driving the company's overall performance to grow significantly as expected. The total number of active contracts in 2018.6 was about 700 million, including 500 million design business and 200 million EPC business, which together reached 3.8 times the company's revenue for the full year of 2017. Among them, the EPC business benefited from the holding of the annual meeting of the Boao Forum and was quickly released, driving the company's overall revenue growth rate of 592%/430% in 2018Q1/H1. We expect the year-on-year growth rate of EPC business revenue to reach 1003% for the full year of 2018, driving the company's overall revenue growth rate to 242% 2. The decline in overall profit level and deterioration in operating cash flow due to business restructuring is a normal phenomenon. It will stabilize. We believe that in the early stages of business restructuring, where the share of EPC business rapidly increased, the decline in overall profit level and deterioration in operating cash flow faced by the company is normal. As the business structure becomes more mature, it will stabilize. The gross margin level of the company's EPC business in 2017/2018H1 was 25.3%/7.8%, respectively, far lower than the design business. Since undertaking the EPC business at the end of 2017 and rapidly releasing revenue, the company's overall gross margin showed a significant downward trend, with 55.08%/39.62%/16.89%/21.41% respectively in the past four quarters. At the same time, the company's net operating cash flow outflow during the reporting period was 28 million, a significant increase over 5 million in the same period last year, mainly due to capital repayment during the implementation of the company's current EPC project The time is later than the operating expenses; on the other hand, the company's traditional design business maintains a high level of profitability, and rates are effectively controlled. The gross profit margin of the company's traditional garden design business during the reporting period was 59.4%, up about 4.3 percentage points from 2017, maintaining the leading level in the industry. Among them, the gross margin in the ecological wetland, real estate landscape, leisure and vacation, and municipal garden segments was 64.9%/61.3%/57.3%/56.7%, respectively. The company's rate for the period was 6.44%, a significant decrease of about 16 percentage points from 2017, and was effectively controlled, far lower than similar companies such as Meishang Ecology (9.8%), Lingnan Co., Ltd. (12.75%), Palm Co., Ltd. (15.68%), Oriental Garden (17.12%), and Tiehan Ecology (18%) during the same period; 3. The company's performance is highly elastic, and the performance is highly flexible due to multiple business opportunities. The company's current business scale is at the bottom of the listed companies in the industry. 2018H1's revenue is 342 million, which is only 1/19 of Oriental Garden and 1/14 of Tiehan Ecology during the same period, and has higher growth potential. Following Boao, it is expected to fully benefit the Xiong'an market. The company has been selected for the Xiong'an Baiyangdian planning and design supplier list, and was invited to participate in the design work related to the plot of the new district start-up area and the preparation of the “Xiong'an New Area Street Tree Species Selection and Planting Design Guidelines” in the future. It is not ruled out that in the future, the company will set up branches and subsidiaries in Xiong'an New Area to explore the surrounding market business; we believe that in the future, the company may enter the PPP field to further expand its scale of performance. The reason is that the company is actively expanding the EPC business to broaden the industrial chain and achieve major breakthroughs. PPP is based on the EPC's further engineering model market-based upgrade, which is more conducive to the company's performance growth and business structure optimization. The current PPP clearance has come to an end, policy gaps have basically been cleared, the market structure is fully optimized, the project implementation rate continues to rise, and the market space is still vast. As a private enterprise garden design leader, the company is expected to benefit from policies and industry fund support to undertake more PPP projects in the future. At the end of the reporting period, the company's balance ratio was 31.79%, which is still at a low level. It is strategically cooperated with Oriental Garden, a leading PPP private enterprise, to carry out comprehensive ecological environment management projects, and is expected to undertake PPP projects to further expand its performance in the future. Conclusion: During the reporting period, the company further raised the gross margin level of traditional design business and effectively controlled the period rate. Both indicators were at the leading level in the industry. Currently, there are plenty of orders in hand. Among them, EPC orders benefited from the annual meeting of the Boao Forum and were quickly released, driving the company's performance to grow significantly as expected. In 2018 Q1/H1, the total revenue growth rate was as high as 592%/430%, and the net profit growth rate was as high as 184%/91%. We expect EPC project revenue to grow by 1003% year-on-year in 2018, driving the company's revenue/net profit growth rate to 242%/175%. We believe that as the overall profit level declines and operating cash flow deteriorates due to business restructuring, it will stabilize as the business structure becomes more mature, and the company is expected to fully benefit from Xiong'an and maintain high performance growth in the PPP market in the future. The company's revenue from 2018 to 2020 is estimated to be 629 million yuan, 849 million yuan and 1.03 billion yuan, respectively; earnings per share are 0.75 yuan, 0.82 yuan, and 0.92 yuan, respectively. The corresponding PE is 37X, 33X and 30X, respectively, covered for the first time, giving it a “recommended” rating.