Incidents: The company recently announced that several projects won the bid: 1) The company jointly won the bid for the farmland water efficiency water-saving irrigation PPP project in Xiliang Irrigation District of Wushan County, with a total investment of 210 million yuan; 2) the company's wholly-owned subsidiary pre-won the bid for the 2019 agricultural high-efficiency water-saving engineering construction project in Culunqi, Tongliao City (first stage), with a total project amount of 81.06 million yuan; 3) The company's wholly-owned subsidiary pre-won the bid for the 2019 Naimanqi, Tongliao City high-efficiency water-saving irrigation project (first stage), with a project amount of 127 million yuan. Key investment points: Winning bids one after another highlights the ability to get orders, and the increase in operating orders has helped improve the structure. The company has industry-leading advantages in the field of efficient water saving in agriculture, has a complete and complete industrial chain in water-saving irrigation and the entire water conservancy industry, and has gradually extended its business areas to rural sewage treatment and safe drinking water for farmers. It has completed the “three agriculture and three waters” strategy and industrial layout, and has strong order collection capacity. In 2018, new orders of 4.5 billion yuan were signed, an increase of 52% over the previous year. It is worth noting that there has been a steady increase in franchise orders. In 2018, 3 new BOT contracts were added, with a total investment amount of 3,518 billion yuan. In 2019, the new PPP project for a township environmental protection upgrade project in Suzhou District of Jiuquan City and the newly announced PPP project for farmland water conservancy and efficient water-saving irrigation in Wushan County won the bid, with a total amount of 364 million yuan. At the same time, the company used its own capital of 31.36 million yuan to acquire 62.01% of the shares of Yuanmou Dayu Water Conservation Co., Ltd. held by the Yunnan Farmland Water Resources Investment Fund Partnership (limited partnership) (the company is the limited partner of the fund). The project is a PPP project and has now entered the operation and maintenance period, and will contribute operating revenue to the company after the acquisition. The increase in the share of BOT projects will help the company improve its revenue structure. Sufficient orders provided support for the company's performance. In 2018, the company achieved operating income of 1.78 billion yuan, an increase of 38.55% over the previous year, and net profit of 100 million yuan, an increase of 4.99% over the previous year. The first quarter of 2019 achieved operating income of 399 million yuan, an increase of 11.15% over the previous year, and net profit of 50.84 million yuan, an increase of 10.38% over the previous year. Water saving work will be further promoted, and the company is expected to directly benefit as a leader. When deploying this year's water-saving work, the Information Office of the State Council pointed out that by vigorously promoting and promoting efficient water-saving irrigation in the field of agricultural water conservation and efficiency, by 2020, 40% of county-level administrative districts in the northern region and more than 20% in the southern region will meet social standards for water conservation, and by 2035, all county-level administrative districts will meet social standards for water conservation. At present, the effective utilization coefficient of farmland irrigation water in China is 0.548, while developed countries in the world have reached 0.7-0.8. China still has a lot of room for improvement. Agricultural water consumption accounts for more than 60% of the total domestic water consumption. The application of water saving in the agricultural sector has made great progress. Demand for high-standard and efficient water-saving farmland construction is expected to increase significantly, and the company is expected to directly benefit. With the layout of farm services, the customer structure is expected to be more diverse. As rural land circulation gradually progresses, new agricultural operators such as family farms, farmers' cooperatives, and planting enterprises continue to emerge, and agricultural modernization and large-scale operations are expected to accelerate. The company follows this trend, actively explores non-government customers such as farmers and agricultural groups, and establishes extensive partnerships with suppliers, distributors, distribution platforms, information technology service providers, etc. in agricultural services and distribution chains to open up upstream and downstream agriculture, and the farm service capacity continues to increase. Facilitate the development of high-value-added farmland customers, and the customer structure is expected to become more diverse. Focus on digital agriculture and build the Internet of Things for farmland. The company brought in Sun Jiong, Li Fengming and a group of professionals from leading cloud computing and IoT companies such as Alibaba and Huawei, and is committed to building competitiveness in agricultural science and technology. Currently, it has been able to use IoT, big data, cloud computing and other technologies to provide comprehensive smart water conservancy cloud platforms and solutions with advanced international standards to achieve the full cycle of farmland projects and traceability management of agricultural products to meet the needs of fine management and efficient operation of water resources facilities. Innovative products such as the farmland IoT “Huishui Cloud” control system have passed testing, inspection and delivery for production. We believe that water resources are the core element of farmland operations. By entering this factor, the company can continue to expand the fields of agricultural products and distribution, giving full play to favorable advantages in fields such as informatization in the field of agricultural products and distribution, enhancing market competitiveness and customer stickiness. Both cash flow and financing have improved. In 2018, the company stepped up its work to clear accounts receivable arrears. The net cash flow from operating activities was 798 million yuan, a significant increase from -14 million yuan in 2017. In terms of financing, the company's main business is in line with the national strategic development direction of “rural revitalization”. By leveraging the advantages of strong financial support for agriculture-related and water-related businesses, the company maintains close financing channel ties with major financial institutions and has signed a “general to total” cooperation agreement with the head office of the Industrial and Commercial Bank of China. Financing costs are expected to improve. Maintain the company's “increase in holdings” rating: Rural revitalization has been upgraded to a new national strategy, and investment in agriculture and rural areas will continue to increase in the future. Among them, the construction of high-standard and efficient water-saving farmland is the focus of investment. The company is a leader in the domestic agricultural water-saving industry and will fully benefit from the development dividends of the industry. The abundance of on-hand orders can strongly support future performance growth, and the increase in BOT projects will help improve the business structure. New fields such as agricultural IoT, informatization, and farmland services provide new directions for companies to enhance market competitiveness and optimize customer structure. Based on industry development dividends and the company's competitive advantages, we predict that the company's EPS in 2019-2021 will be 0.24, 0.34, and 0.51 yuan/share, respectively, corresponding to the current stock price PE of 30.28, 21.01, and 14.24 times, respectively, maintaining the company's “increased holdings” rating. Risk warning: risk of policy implementation falling short of expectations; risk of project commencement and progress falling short of expectations due to the financing environment; receivables risk.