Incidents: Enlightenment Sander (000826) released its 2018 annual report, achieving operating income of 10.994 billion yuan, an increase of 17.48% over the previous year; net profit of 644 million yuan, a year-on-year decrease of 48.53%; net profit after deduction of 605 million yuan, a year-on-year decrease of 48.96% over the previous year, and plans to distribute 0.3 yuan to 10 shares. Comment: Expenses and asset impairment increased significantly during the period, dragging down net profit. The company's main business covers the fields of solid waste disposal, integration of new sanitation, recycling of renewable resources, aquatic ecology, special sanitation vehicles and environmental protection equipment R&D and manufacturing. Net profit decreased by nearly 50% year over year, mainly due to increased period expenses and asset impairment accrued against receivables. The gross profit margin for the year was 27.69%, down 3.26 percentage points year on year, and the period expense ratio was 17.98%, up 2.79 percentage points year on year. Sales expenses, management expenses, and financial expenses increased 66%, 49%, and 44% year on year, respectively. Accounts receivable at the end of the period were $6 billion, an increase of 55% from the beginning of the period. Asset impairment losses due to bad debt preparations increased by $251 million year-on-year. Operating cash flow was still poor, at -743 million yuan. The scale of key businesses such as solid waste disposal, sanitation integration, and renewable resources continues to grow. The company's annual solid waste treatment business revenue increased 130% year over year. The solid waste treatment capacity is 4,0743 million tons, 36 solid waste projects are in operation, the daily treatment scale of domestic waste power generation projects is 34,700 tons, 15 domestic waste power generation projects have entered the operational recovery period, with a treatment scale of 10,700 tons/day, and the daily treatment scale of food waste disposal projects is 2,515 tons. The company is one of the first enterprises in the country to implement the “integration of two networks”, that is, garbage sorting and recycling of renewable resources. 132 new sanitation projects were signed throughout the year, with a total contract value of 14.379 billion yuan. The project is distributed in 26 provinces across the country, with a service area of 1,002 billion square meters. The revenue of the sanitation services business increased 88% year over year. The application of the sanitation cloud platform has greatly improved the quality and efficiency of services. In terms of R&D and manufacturing of sanitation vehicles, the design of 103 new vehicle products was completed throughout the year, and the development and trial production of heavy-duty electric driverless sweepers also completed testing in designated regions. Currently, there are 19 project companies engaged in waste dismantling business. The total number of scrapped cars dismantled has reached 32,000, and the annual amount of electric waste dismantled is about 12.31 million units. Revenue from the recycling business increased 15.06% year over year, and the renewable resources trading platform built in the “O2O+ Industrial Park” model is expected to increase the profitability of the sector. Xiongan has joined the company and is looking forward to the new management team's strength. In March, the company announced that funds controlled by Xiong'an Group and/or the Xiong'an New Area Management Committee and Tsinghua Holdings would be juxtaposed to become the largest shareholder of Qidi Holdings, the company's indirect controlling shareholder. The company set up a wholly-owned subsidiary, Xiong'an Puhua, in Xiong'an to become the implementation platform for water business. The company is expected to gain a large market share in the field of environmental protection construction in Xiong'an New Area. The company plans to change its name to Enlightenment Environment and replace the chairman and general manager. It is looking forward to the new management. Profit forecasts and investment advice. It is estimated that the EPS for 2019-2020 will be 0.57 yuan and 0.78 yuan respectively, and the corresponding PE will be 25 times and 18 times, respectively, downgraded to a prudent recommendation rating. Risk warning. Funding was tight, project progress fell short of expectations, and business expansion fell short of expectations.