The company released its 2018 annual report, with annual revenue of 2,298 million yuan, a decrease of 0.21%; net profit of 388 million yuan, an increase of 36.13%; and EPS of 0.57 yuan, an increase of 35.71%. Business growth slowed in 2018, but the quality of financial reports improved markedly. Key points supporting ratings The quality of financial reports has improved markedly, gross margin has increased, and cash flow has recovered: the quality of the company's financial statements improved markedly in 2018. The gross margin increased by 6.99pct to 34.26%, mainly due to the increase in the gross profit of ecological restoration, the contraction of the low-margin landscape business, and the increase in high-margin ecological and cultural tourism revenue. With the improvement of the business structure, the company's cash flow has recovered, with a net inflow of 163 million yuan for the whole year, which is rare in an environment where the industry's capital is generally deteriorating. After the company went public, financing channels opened up and business was expanded, but the quality of cash flow deteriorated. The turnover ratio of accounts receivable stopped falling and rebounded in 2018, the reduction in funding cash flow, and the stabilization of the cash ratio all reflected the management's idea of shrinking scale and improving business quality. Steady management, contraction of PPP and improvement of the quality of performance of real estate and gardens: Since 2018, the company has operated more prudently. No new PPP projects have been signed, and orders are mainly for municipal administration and ecological restoration. In an environment where real estate capital is tightening, the company has shrunk its real estate and garden business, improving profit quality and project payback. The fixed increase relieves capital pressure, and the new product “Mufun” enhances performance and cash flow: the company completed a fixed increase in March this year, raising 930 million yuan in capital, and the financial pressure has clearly eased. The production capacity of the new product “Mufun” continues to be launched, which is an important growth point for the company's performance and cash flow. With the improvement of social finance data, there is room for improvement in the garden sector: with the improvement of social finance data, the garden sector is expected to experience a double improvement in fundamentals and valuation. The company has sufficient capital on hand, and future performance improvements are more certain, and is expected to be the first to benefit from the recovery of the industry. The valuation company's business style has turned steady, and the financial pressure is lower than that of the same sector. It is estimated that in 2019-2021, the company's revenue will be 24.35, 33.01, and 4.185 billion yuan; net profit will be 5.20, 6.93, and 875 million yuan respectively; and EPS will be 1.633, 2.175, and 2.746 yuan, maintaining the company's holdings growth rating. The main risks faced by ratings, industry valuation repairs fell short of expectations, and the progress of “Mufun” products fell short of expectations.