Has a strong brand advantage, business layout is perfect. The company's main business is landscape architecture and tourism scenic spot planning and design, landscape and municipal engineering construction, comprehensive management of ecological environment, cultural tourism project investment and development, PPP project investment and operation, etc., won a number of industry honors, obvious brand advantages. The company has project layout throughout the country, landscaping project construction is the company's main source of income, revenue contribution of more than 96%, the main customers are head high-quality real estate companies and local governments with strong economic strength and good payback conditions and their subordinate companies.

Sound business philosophy, strong financial strength. The company attaches great importance to project risk control and adheres to the principle of cautiousness. at the beginning of the credit contraction from the end of 2017 to the beginning of 2018, the company set up a risk control department to control the risk of the intended project from the perspectives of project return, financing conditions, financing costs and payback conditions, and timely adjust the project schedule and control financial risks. At the end of 2018, the asset-liability ratio was only 34.54%. In the first three quarters of 2019, the asset-liability ratio was 39.12%, significantly lower than that of other companies in Shenwan landscape engineering industry. In 2019, the company continued to increase the payment efforts, strictly required the payment schedule, at the same time, increased the tilt of internal resources for better projects, and the company's cash flow significantly improved. The operating net cash flow reached 187 million yuan in the first three quarters of 2019, a sharp increase from-475 million yuan in the same period last year. By the end of the first three quarters, the company has a monetary capital of 728 million yuan, while the company plans to issue convertible bonds to raise 950 million yuan under review by the regulatory authorities, with a bank credit line of 3.213 billion yuan, strong capital sources and strength, enough to support the landing of the order on hand.

Abundant orders on hand, supporting the continued growth of performance. By the end of the third quarter of 2019, the company had signed a total of 626 unfinished orders, totaling 6.794 billion yuan, of which engineering orders accounted for 95%. The total amount of on-hand orders is 2.38 times of the annual operating income in 2018, effectively ensuring the continued growth of performance.

"Garden +" as the core to build a comprehensive ability of ecological management. The company has always attached importance to technological innovation and research and development. on the basis of the core technology of the original garden industry chain, the company has made greater efforts to develop ecological management and restoration technology and comprehensive planning and design capabilities, focusing on the three major directions of water, soil and green. at present, there are constructed wetlands, sponge urban construction, microbial water purification technology, soil comprehensive improvement and other core technologies, forming a comprehensive ecological management capability, leading the layout in the same industry. Fully meet the requirements of the gradual integration and large-scale of the current ecological management projects. At present, there are many projects of corporate ecological governance in Liaoning, Hubei, Henan, Guizhou and other places. In the future, the company will continue to expand in the direction of ecological environment management, continue to deepen in the direction of subdivision such as river and lake management, wetland construction, and sponge cities, and increase the intensity of investment and mergers and acquisitions of assets with a higher degree of marketization and better cash flow. we will constantly improve the ability of comprehensive management of large ecology.

Cultural brigade brings new attractions. The company actively tries to extend the garden industry chain downstream and develop literature and tourism business through the design and construction of characteristic towns, theme tourism and other projects. in September 2019, the company plans, designs and invests in the construction of Wuhan liberal arts ecological garden, the project integrates pastoral tourism, research tourism, ecological science popularization, etc., to create a new business model demonstration for the company, which is expected to be promoted in the future. In the self-built project at the same time, the company is also actively looking for cultural travel related M & An opportunities, cultural travel business is expected to bring new interest and new performance growth points for the company.

Coverage for the first time, give the company "increase" rating: we are optimistic about the company's sound business philosophy, the health of financial statements is better than that of peers, on-hand orders are sufficient to support performance growth, and technology research and development meets the requirements of the current project integration and large scale. at the same time, research and other cultural travel and new directions of environmental governance bring new highlights to the company. Regardless of the impact of the subsequent issuance of convertible bonds on equity, it is estimated that the EPS of the company from 2019 to 2021 will be 0.53,0.59 and 0.67 yuan per share respectively, and the previous estimated PE will be 10.48,9.33 and 8.27 times respectively. Coverage for the first time, giving the company an "overweight" rating.

Risk hint: the risk that the project schedule is not up to expectation; the risk of failing to issue convertible bonds; the risk of rising financing costs; the risk of accounts receivable.