Incident: The company released its 2018 annual report. It achieved annual revenue of 1,866 billion yuan, an increase of 28.32%, and achieved net profit of 168 million yuan, an increase of 11.74%, and a net profit of 162 million yuan, an increase of 14.2%; the Q4 performance growth rate was quite impressive, and continued to grow steadily throughout the year. Orders and revenue from the main design business are growing rapidly, supporting performance and optimizing the structure. Deeply involved in the Jiangsu market, the East China business accounts for a relatively high share and is expected to benefit from the integrated construction of the Yangtze River Delta. The Q1-Q4 revenue growth rate was 51%/15%/20%/32%, and the return to mother growth rate was 15%/-1%/12%/27%. Revenue/return for the whole year increased by 28%/12%, respectively, and the growth rate remained high. Design business order revenue grew rapidly. The annual revenue of 1.74 billion new design contracts (YOY +165%) reached a record high, doubling the design revenue during the period, achieving design revenue of 800 million yuan, a significant increase of 41.9% (+4.7pp), accounting for 47% (+4.5pp). The gross profit ratio of 38.8% is far higher than that of general engineering contracting (5.3%), which will support performance growth and optimize the overall business structure in the future; in the future, East China will receive 1.26 billion yuan (YOY +42%), accounting for 69%, and is expected to obtain more in the Yangtze River Delta construction market in the future. Business; gross margin/rates are losing ground over time, and increased impairment weakens overall profitability. The gross profit margin of 25.11% (+0.5pp) during the reporting period represents an increase in high-margin design and project management business. The management/financial/period rate is 11.92% (-0.2pp)/-0.03% (+0pp)/11.89% (-0.1pp). The depreciation was $46 million (YOY +544%), accounting for 26% (+21pp) of net profit. This was due to an increase in account age within one year or more in the current period. Affected by this, the net margin was 9.6% (-1.6pp). The current pay-to-payment ratio is 83.11% (-10.8pp)/52.16% (-7.3pp), operating cash flow of $89 million (YOY -50%), mainly due to increased labor cost payments in the current period after business expansion; debt ratio of 41.22% (+2.2pp), leading domestic service provider for the entire park construction industry chain, with a significant competitive advantage in the design-led EPC field. The company grew up in the Suzhou Industrial Park, which is a model for the construction of domestic development zones, and has reached a leading domestic level in engineering design, project management and general contracting business in the fields of modern industrial plants, creative and technological industrial parks. In particular, it has significant competitive advantages in design-led EPC and engineering design+supervision+management businesses dominated by the architect responsibility system. The company was selected as the first batch of prefabricated construction industry bases by the Ministry of Housing and Construction, and was ranked third in the “2018 Top Ten Private Engineering Design Enterprises” by the China Survey and Design Association, ranked first in the “China Top Ten Private Engineering Design Enterprises” for two consecutive years, and ranked first in the comprehensive strength of Jiangsu architectural design enterprises in 2018; since listing, it has acquired high-quality targets and actively improved the industrial chain and regional layout. The company went public at the end of 2014. Since then, in 2015-2017, it has successively acquired Zhongheng Zhuochuang (100% acquired), Huazao Design (69.13%), and Zhejiang Consulting (65% acquired) to improve the regional and industrial chain layout. In 2018, all targets achieved corresponding promised performance. Among them, Zhongheng Zhuochuang/Huazao Design's revenue growth rate reached 44%/48% respectively. During the reporting period, the company signed an “Equity Acquisition Cooperation Framework Agreement” with the Ningxia Institute of Architectural Design and Research to continue the acquisition process. This move will help the company develop the northwest market, where its current business is relatively small. At the same time, it successfully took a stake in Suzhou Industrial Park Surveying, Mapping and Geographic Information Co., Ltd., one of the top 100 geographical information companies in the country, which is expected to exert business synergy effects in fields related to the industrial chain. In addition, the company established a joint venture to establish Lianheng Planning (holding 45% shares) and directly invested in the VR company Lufu Impression and indirectly in the cloud computing company Shanghai Ucloud Information Technology Co., Ltd. (Ucloud). Among them, Ucloud ranked sixth in China's public cloud market share in 2018H1. It has established a strategic cooperation with China Mobile and received Series E investment (4.9%) from China Mobile. Its application for listing on the Science and Technology Innovation Board was officially accepted by the Shanghai Stock Exchange on 2019/4/1, and the company may benefit further; employee incentives will be further strengthened. During the reporting period, the company completed repurchases and implemented the stock incentive plan, awarding a total of 5.19 million shares (1.9% of the total share capital), covering 256 incentive recipients, and announced the second repurchase plan in November 2018. It will continue to expand the incentives and fully demonstrate the company's operating confidence. Profit forecast and investment rating: The company is expected to achieve operating income of 2,484 billion yuan, 3,049 billion yuan, and 3.6 billion yuan respectively; net profit to mother of 235 million yuan, 291 million yuan and 333 million yuan respectively; EPS is 0.85 yuan, 1.06 yuan and 1.21 yuan, respectively, and the corresponding PE is 17.1X, 13.8X and 12.1X, respectively. Covered for the first time, giving it a “Recommended” rating. Risk warning: 1. Macroeconomic risk; 2. Market competition risk; 3. Goodwill impairment risk.