Events: In the first half of 2018, the company achieved revenue of 4.938 billion yuan, up 76.68% year on year; realized operating profit of 457 million yuan, up 57.08% year on year; realized net profit of 385 million yuan, up 42.93% year on year; EPS was 0.17 yuan, down 5.56% year on year, and weighted average return on net assets of 6.12%. Comment: 1. Focusing on ecological agriculture and environmental management business, revenue and net profit increased steadily. The company's revenue and net profit increased steadily in the first half of the year, mainly due to the country's rural revitalization and environmental management policies, the company's deep cultivation in ecological landscape, ecological environmental protection, ecotourism and environmental management. By sector, the ecological and environmental protection sector grew rapidly, achieving revenue of 2,321 billion yuan, an increase of 147.88% over the previous year, and the municipal garden sector achieved revenue of 1,917 billion yuan, an increase of 26.10% over the previous year. By region, the eight major regional businesses mainly focus on South China and Southwest China, with revenue ratios of 26.61% and 30.92% respectively, followed by East China, Central China, and Northwest China, with revenue ratios of around 14%. On a quarterly basis, the company's Q1 and Q2 revenue in 2018 was 1300 billion yuan and 3.638 billion yuan respectively, with year-on-year growth rates of 69.80% and 79.27% respectively. The overall revenue growth rate for both quarters increased steadily; Q1 net profit was -72 million yuan, down 90.60% year on year, and Q2 net profit was 455 million yuan, up 67.09% year on year, mainly due to low revenue affected by the season in the first quarter. Revenue and profit rebounded in the second quarter. In the first half of 2018, the company signed new contracts worth 11.617 billion yuan, and has won unsigned contracts worth 11.361 billion yuan. In the newly signed contract, the company increased the proportion of comprehensive ecological agriculture projects, accounting for more than 70% in total with ecological environment management. 2. The expense ratio increased year on year, accounts receivable as a share of revenue declined, and operating cash flow recovered. In the first half of 2018, the company's gross margin increased slightly by 0.97 pp to 26.19%. Among them, the gross margin of the ecological and environmental protection sector remained high at 27.20%, up 0.84 pp year on year; the gross margin of the municipal garden sector declined, down 0.66 pp to 23.88% year on year. The cash-on-to-income ratio was 66.03%, down 28.13 pp. The ratio of accounts receivable to revenue was 17.58%, down 6.73% from the same period last year. In the first half of the year, the net interest rate fell slightly by 1.51 pp to 7.75%. Due to the increase in the fee rate for the period, the year-on-year increase was 1.39 pp to 18.00%. The main reason for the high cost rate is that the company has implemented regional management, increased remuneration, rent, office expenses, etc. for related personnel, and the implementation of equity incentive plans. The company's balance ratio remained stable and rose slightly, up 1.86 pp to 70.54% year on year. Operating cash flow recovered after three quarters of negative values. Its net amount was 108 million yuan, down 26.27% from the same period last year. Repayments are expected to accelerate in the second half of the year, and the annual cash flow is expected to improve further. 3. Actively broaden financing channels. Implementing PPP financing in the second half of the year is expected to improve. Under the general environment of financial deleveraging, PPP financing faced strict financial supervision, financial supervision, and central bank downsizing in the first half of 2018. The company actively explores financing channels, strongly connects with policy banks and non-bank financial institutions, and has been approved for PPP loans of 566 million yuan. The second half of the year will further expand financing channels, promote capital market financial instruments such as PPP special bonds and ABS, and supplement business capital. After the last round of PPP clean-up, the company's new orders were standardized and implemented quickly. The credit environment may ease in the second half of the year, and the PPP financing situation is expected to improve. 4. There are sufficient orders in hand, and financing is expected to improve. Maintaining “Highly recommended-A” rating companies that cater to rural revitalization and ecological environment policies, and are deeply involved in rural tourism, ecological landscape, environmental management, etc., have achieved steady growth in performance. At the same time, the company has achieved positive operating cash flow and relieved the pressure on cash flow in the second half of the year; in addition, the company has vigorously strengthened cooperation with policy banks and non-bank financial institutions, striving to broaden financing channels. The annual performance target is expected to be achieved in the context of improved financing in the second half of the year. The EPS for '18 and '19 is expected to be 0.49 or 0.70 yuan, and the corresponding PE is 10.9 times and 7.7 times. 5. Risk warning: The implementation of PPP projects falls short of expectations, financing is difficult, and repayment risks.