Incident: The company released its 2018 semi-annual report. The first half of 2018 achieved revenue of 342 million yuan, a year-on-year increase of 429.99%; net profit to mother was 0.25 million yuan, an increase of 90.70% over the previous year. Comment: Gross margin declined, operating and investment cash flow declined: The company achieved a gross profit margin of 18.98% in the first half of 2018 (2017H1 was 57.44%), a year-on-year decrease of 38.46 percentage points, mainly due to vigorous expansion of EPC business; achieved a net profit margin of 7.17% (19.92% in 2017H1), a year-on-year decrease of 12.76 percentage points; the period expense ratio was 6.45% (2017H1 27.03%), a year-on-year decrease of 20.58 percentage points. The net cash flow from the company's annual operating activities was -028 billion yuan, down 431.23% from the same period last year, mainly due to the implementation of the company's current EPC project, and the capital repayment time was later than the operating expenses; the net cash flow from investment activities was -121 million yuan, down 3675.26% year on year, mainly due to the new office buildings purchased by the company still being renovated, leading to an increase of 118.18% over the same period last year, mainly due to the amount of capital raised by the company in the previous year The latter portion was used to repay bank loans. The overall net cash flow from fundraising activities was positive, and the company had dividend expenses in the current period, resulting in negative net cash flow from fundraising activities. Actively expand the EPC model to drive significant revenue growth: the company focuses on the “design” and “ecological environment” two-wheel drive development models, explores general engineering contracting business with its advantages in garden design, and actively expands the margins of the industrial chain. The garden design business achieved revenue of 74.904 million yuan, an increase of 14.88% over the previous year, of which real estate landscape/ecological wetland/municipal garden/leisure vacation achieved revenue of 743.91/1922.46/2865.81/187.687 million yuan, respectively, with gross margins of 61.26%/64.87%/56.72%/57.26%, respectively; in terms of general engineering contracting (EPC) in the Boao region since 2017, the company has successively taken over multiple project general contracting (EPC) businesses in the Boao region, contributing 2.68 to revenue in the first half of this year At 100 million yuan, gross profit margin was 7.78%, driving a significant year-on-year increase of 429.99% in total revenue. With design and construction, there are sufficient orders in hand: Starting with the 2017 Aoda Agricultural National Park Phase I Project General Contracting (EPC), the company relied on design advantages to drive construction to the back end of the industrial chain. Since 2018, the company has successively signed major contracts such as the Boao Binhai Avenue Greening and Upgrading Project (EPC), the Boao Road Landscape Renovation and Upgrading Project, and the Shili River Comprehensive Remediation Project Design Project in the Beiyang Green Heart Start Area in Putian City. The project amount reached 102 million yuan, accounting for 55.72% of the annual revenue in 2017. According to our statistics, the company currently has orders of about 700 million yuan, of which landscape design is the main business, the amount is about 500 million yuan, and the expanded EPC business amount is about 200 million yuan. The company has successively signed major contracts, which helps the company explore new markets, maintain rapid business growth, further enhance brand awareness, and enhance core competitiveness. Financial forecasting and valuation: The company is expected to achieve net profit of 0.85/1.5/252 million yuan in 2018-2020, an increase of 144.8%/76.8%/67.4% year-on-year, corresponding EPS of 0.66/1.17/1.97 yuan. The current stock price, corresponding to 2018-2020 PE, is 40.1/22.7/13.5 times, maintaining the “Highly Recommended” rating. Risk warning: EPC model expansion falls short of expectations, repayment risk, etc.