Performance fell short of expectations. Maintaining the “buy” rating, the company released its 18-year annual report, achieving revenue of 13.293 billion yuan, YoY -12.69%, net profit of 1,596 billion yuan, YoY -26.72%, net profit after deducting non-recurring profit and loss YoY -42.40%, lower than the market and our expectations. The main reason 1) Due to the tight financing environment in 2018, the company actively slowed down construction progress in 18H2, and corresponding revenue decreased; 2) management/financial expenses increased 38.56%/72.46% year over year. The financing environment improved in '19. The company plans to increase the proportion of traditional construction models, and performance is expected to grow steadily. We expect the company to maintain its “buy” rating with an EPS of 0.80/0.96/1.16 in 19-21. Gross margin increased, net interest rate declined, and the cost ratio increased rapidly. Overall gross margin in 2018 was 34.07%, an increase of 2.51pct over the previous year, because 1) the gross margin of municipal gardens increased 6.69pct year over year, 2) the gross margin of global tourism was high (35.26%), and the revenue share increased 8.44pct year on year. The period expense ratio was 18.96%, up 7.96pct year on year. Among them, the management (including R&D) /finance expense ratio increased by 5.41/2.55 pct year on year, respectively. The increase in the management fee rate is mainly related to the increase in labor costs (an increase of 349 million yuan over the previous year), and the sharp increase in the financial expense ratio is related to the increase in average financing costs. Net interest rate declined by 2.61pct to 11.97% year on year, mainly because the increase in expense ratio far exceeded the increase in gross margin. Operating cash flow was under pressure, and the loan structure was adjusted. The net operating cash flow in 2018 was 509.292 million yuan, YoY -98.26%, mainly due to a decrease of 1,896 billion yuan in bank acceptance drafts in notes payable, which led to a 24.61% year-on-year increase in operating cash outflow and an increase of 31.47pct year-on-year in payout ratio. The revenue ratio increased 1.39pct to 69.24% year on year, which had little impact on operating cash flow. The company's loan structure is gradually being adjusted to reduce short-term loans and short-term debt payables, increase long-term loans, and reduce short-term debt repayment pressure. Bank short-term loans plus short-term financing notes have declined from $6,522 million at the end of June '18 to $4.193 billion at the end of March '19. In 2018, the company completed bond payments amounting to 7.760 billion yuan. As the company's preferred stock advances, the company's debt structure is expected to be further optimized, reducing its reliance on short-term debt financing. Adjust business regions and models and broaden financing channels. In 2019, the company plans to focus on promoting business in regions with strong local financial resources and guaranteed payment capacity, and at the same time flexibly adopt the EPC or PPP model to carry out business according to the payment capacity and wishes of local governments. We believe that PPP's share of business will decrease in the future. A financial one-vote veto system is adopted in project decisions, and construction conditions are strictly controlled, and it is hoped that high-quality profits will be restored. The company plans to use equity/bonds to continue financing, reduce the debt ratio, broaden financing channels, and improve the financing structure. At the same time, the company will further strengthen project settlement and accounts receivable management, improve the level of the supply chain, and reduce financial risks. Performance is expected to return to the 17-year level. Maintaining the “buy” rating, we expect EPS for 19-21 to be 0.80/0.96/1.16 yuan (previously estimated 19/20 EPS 1.10/1.28 yuan). The adjustments are mainly due to asset impairment losses and increases in period expenses to affect net profit. The average valuation of the construction and environmental protection industries in '19 was 13.28X/15.16XPE, respectively. The company's performance in '19 is expected to return to the level of '17. Considering the company's tight capital chain, we approved giving the company 12X-13XPE in '19, corresponding to the target price of 9.60-10.40 yuan, maintaining the “buy” rating. Risk warning: PPP projects fall short of expectations, continued deterioration of the financing environment, negative media reports, etc.