Core point of view: 1. Investment events On October 23, 2018, the company announced its report for the third quarter of 2018. 2. Our analysis and judgment performance was in line with expectations, and operating cash flow improved. In the first three quarters of 2018, the company achieved operating income of 1,482 million yuan, an increase of 20.35% over the previous year; realized net profit of 208 million yuan, an increase of 37.16% over the previous year; realized net profit deducted from non-net profit of 205 million yuan, an increase of 35.53%; and net cash flow from the company's operating activities during the reporting period was -0.5 billion yuan, a significant improvement of 83.47% over the previous year, mainly due to the company's strengthened repayment management during the reporting period. The net cash flow from the investment was -143 million yuan, an increase of 61.67% over the previous year, mainly due to the increase in investment funds of PPP project companies and nursery construction. The company's diluted EPS for the reporting period was 0.35 yuan/share, an increase of 40% over the previous year. The balance ratio was 59%, an increase of 9.13 pct over the previous year. Profitability has increased, and financial expense ratios have increased. The gross margin of 2018Q1-3 was 30.38%, up 4.48pct year on year; net profit margin was 14.05%, up 1.72 pct year on year. The company's fee rate for the reporting period was 9.84%, an increase of 0.68pct over the previous year. Among them, the management expense ratio was 5.54%, a year-on-year decrease of 1.5 pct; the financial expense ratio was 4.31%, an increase of 2.19 pct over the previous year, mainly due to the company's increase in bond interest and discounted interest. Long-term receivables and asset impairment losses have increased. The company's long-term receivables during the reporting period were $1,494 million, up 30.26% from the same period last year, mainly due to an increase in confirmed revenue from PPP and EPC projects; asset impairment losses of $40.39 million, an increase of 96.56% over the same period last year, mainly due to an increase in bad debt provisions for accrued accounts receivable. Optimize the layout and enhance core competitiveness. The company established a wholly-owned subsidiary, Muqu Technology, and obtained new China Environmental Label (Type II) product certification and 7 patent certificates, enhancing business collaboration capabilities and core competitiveness. The company's newly developed organic covering “Mu Fun” is at the leading level in the same industry in terms of ecological function, environmental protection function, landscape function and economic function. It has strong market competitiveness and is expected to promote the development of the company's ecological and environmental protection business. Orders are abundant, and the prospects for ecological and environmental protection business are broad. During the reporting period, the company signed contracts of 329 million yuan for ecological treatment and restoration projects and won 4.1 billion yuan in joint bids for major road construction projects. Future performance is supported. The State Council recently issued the “Strategic Plan for Rural Revitalization (2018-2022)”, which puts forward requirements for future rural environmental construction and ecological protection. The green ecology sector is booming. The company focuses on ecological restoration and reconstruction and the construction of a core technology system for landscape regeneration. It has launched ecological restoration technology for mines (slopes) and forests. 2018H1 accounts for 37.88% of its ecological restoration and reconstruction business revenue, and has broad prospects for future business development. 3. Financial analysis 4. The investment proposal predicts that the company's EPS for 2018-2020 will be 0.66/0.92/1.18 yuan/share, respectively, and the corresponding dynamic price-earnings ratio will be 20/14/11 times, respectively, giving it a “recommended” rating.