This report is read as follows:

The company ploughs Henan capital construction design market with strong comprehensive strength, benefits from the upsurge of highway construction and municipal construction in the province, Henan Province has a strong finance to lay a solid foundation for infrastructure construction, and the company's expansion outside the province is advancing steadily with outstanding growth.

Main points of investment:

Maintain and increase holdings. The company benefited from the rapid growth of Henan capital construction design leader, and the capital construction rebound design benefited first. It maintained the forecast company's EPS of 2.23 EPS 3.21 prime 4.09 yuan in 2018-20, with a growth rate of 33 gamble 44 shock 27%, maintained the target price of 49.6 yuan, and doubled PE on 15-11-8, 2018-19-20, increasing its holdings.

Henan highway / municipal construction space is high, the company's strong strength will benefit. 1) Highway: 1) the comprehensive density of Henan highway is about 0.041km (10,000 ② 2) domestic 23rd ② 13th five-year Plan requires expressway traffic 7800km is only about 6600km at present, and the planning is still under construction. ③ Henan highway has high passenger volume and good economy; 2) municipal administration:

1) the density of roads and bridges in Henan Province, such as Baicheng quality improvement / Central Plains Urban agglomeration / Zhengzhou National Central City, has a large gap compared with the first-tier provinces and cities; 3) the company's fundamentals are excellent: strong profit (gross / net interest rate 48x28%) / debt ratio 35% lower / funds on hand 74% higher than revenue. 4) the company's qualification / technology / cohesion / per capita net four logical support to benefit from the highway / municipal construction boom in the province, we estimate that the company's highway design income in 2018-20 will be about RMB 1.03 billion, while that of municipal design will be RMB 2.02 billion.

Henan's strong financial debt ratio is low / the central transfer payment is high, and the good operation of the two platforms is conducive to the promotion of infrastructure.

1) Henan's total GDP ranks 5th / 2018GDP for many years, the growth rate of 7.6% is higher than the national 6.6% + general public budget income growth rate of 10.5% is higher than the national 6.2% of 2017 local debt ratio of GDP12.5% 29 + debt ratio of 163% 23; 2) Henan won the second place of 118.4 billion in the central 2019 transfer payment, the first balanced payment of 97.3 billion yuan. 3) the two major platforms of Henan highway construction and operation are high-speed management company / exchange group, with a relatively low debt ratio of 65% and good operation, which is conducive to the promotion of infrastructure in the province.

The company firmly promotes the layout outside the province. 1) there is a wide space for domestic highway / municipal construction, and the recent intensive catalysis of infrastructure construction (acceleration of local debt / acceleration of infrastructure examination and approval / local two sessions, etc.) / continued loose policies are good for the rebound of infrastructure growth and the accelerated landing of infrastructure projects; 2) the company will benefit from strengthening the localized layout (setting up 6 regional management centers outside the province) and actively expanding overseas. 3) 20% of the company's non-provincial business may be raised to at least 40% in the future, and a branch will be set up in Xiongan or benefit from the promotion of Xiongan construction.

Core risks: infrastructure growth is lower than expected, non-provincial and overseas market expansion is not as expected, etc.