Event: Oriental Garden released its 2019 annual performance report. The company achieved operating income of 7.71 billion yuan in 2019, down 41.98% from the same period last year; net profit attributable to shareholders of listed companies was 61.1555 million yuan, down 96.17% from the same period last year. Among them, the company achieved revenue of 3.836 billion yuan and net profit loss of 886 million yuan in the first three quarters of 2019; in the fourth quarter, it achieved operating income of 3.877 billion yuan in a single quarter and realized net profit of 947 million yuan, up 6.4% and 52.5% year-on-year respectively. Comment: 1. The performance exceeded expectations, and the annual performance was corrected. The fourth quarter results achieved a sharp recovery of the company's annual net profit of 61.1555 million yuan, the full-year correction from the company's net profit loss of 886 million yuan in the first three quarters, and was close to the upper limit of the 2019 operating performance forecast range (-350 to 100 million yuan) in the company's “2019 Third Quarter Report”, and the performance exceeded expectations. The company's business situation improved markedly in the fourth quarter of 2019. It achieved revenue of 3.877 billion yuan and net profit of 947 million yuan in a single quarter, a significant increase from the third quarter, respectively. Net profit for the fourth quarter was significantly higher than the level of 620 million yuan in the same period in 2018, second only to 1.31 billion yuan in the fourth quarter of 2017 in history. 2. The inventory of projects has been sorted out effectively, and historical business risks have been better eliminated. Chaoyang state-owned capital has invested, liquidity has increased markedly, and collaboration between the two sides has gradually developed. The company's fundamentals have been at an inflection point. The company's fundamentals have been at an inflection point. In 19 years, the company has sorted out projects one by one according to industry policies, financing environment, local financial resources, its own investment strength, and the wishes of implementing agencies, etc., and historical risks have been better eliminated. The company took the lead and continued to follow up on nearly 100 projects after winning the bid. Among them, there are about 40 loan contracts that have been signed and loans that can be implemented relatively quickly, and about 10 that have yet to be completed and repurchased after completion. The remaining projects that continue to be negotiated are basically standardized projects for warehousing. The quality is relatively good. In the future, they will be revitalized through project disbursement, conversion to traditional projects, transfers, and continuous financing. Overall, the company's inventory projects have been sorted out effectively, and historical business risks have been better eliminated. On September 30, 2019, the company's controlling interest transfer was completed, and Chaoyang state-owned assets became the actual controller of the company. After Chaoyang state-owned capital joined, the company was given strong liquidity support in terms of renewing stock loans, increasing credit for some additional financing, expanding financing channels, and advancing project financing: First, the debt period was lengthened, and some loans were extended from one year to three to three years. The company's debt repayment pressure was greatly reduced; secondly, financing costs have been reduced. The company's original comprehensive average cost is about 10%, and the current average cost of a new contract is no more than 10% More than 6%; finally, corporate financing channels have also been broadened. Direct and indirect financing channels are available, and various channels such as green bonds and asset securitization are being promoted. Recently, the company's revised plan for the non-public issuance of preferred shares has been approved by the shareholders' meeting. The company plans to issue no more than 30 million preferred shares, raise no more than 3 billion yuan in total capital, and no more than 2.5 billion yuan of capital raised to repay loans from financial institutions and repay maturing bonds, and no more than 500 million yuan to supplement liquidity; the company also recently announced that the controlling shareholders intend to provide the company with strong liquidity support such as credit enhancement and entrusted loans; the issuance of preferred shares and liquidity support provided by controlling shareholders will further optimize the company's financial structure, reduce balance ratio, and strengthen Liquidity is a strong guarantee for the smooth development of business. In addition to liquidity support, Chaoyang's state-owned assets and companies are increasingly deepening resource collaboration, etc., to promote the company's return to the path of high-quality business development. Chaoyang District is promoting large-scale greening, building a park city, and gradually constructing a regional green space structure of “two rings, six wedges, five rivers and ten gardens”. Demand for the ecological and environmental protection industry continues to grow. At the end of '19, the company won bids for more than 500 million yuan of projects in the region, and the promotion of other projects is progressing in an orderly manner. The company's stock projects have been sorted out effectively, and historical business risks have been released. After Chaoyang's entry, support for the company in terms of liquidity and resource collaboration has increased, the execution of the company's manual engineering projects has been effectively promoted, and the hazardous waste business has recovered rapidly. At the same time, as the company's operations regain vitality, the company can regain its brand and industry competitiveness advantages in ecological and environmental protection fields such as garden landscape, water environment management, and industrial hazardous waste disposal. Returning to the path of business development, the company is currently at an inflection point in terms of basic orientation. 3. The company and industry resonate, and 20-year performance is expected to achieve significant restorative growth. On February 21, the Politburo meeting set a new tone for China's future economic and social development. After the economy was affected by the epidemic in the first half of the year, policy strength is also expected to increase in the second half of the year. Environmental infrastructure will be an important investment direction for future economic construction and recovery, and the company will also usher in better industry opportunities; under the resonance of company operations and industry sentiment, the company's performance for the full year of 2020 is expected to achieve significant restorative growth. Net profit for 20-21 is estimated to be 11.15 billion yuan to 1.60 billion yuan, and the PE valuation for that year was 10.9 times, maintaining a highly recommended rating. 4. Risk warning: 1. Risk of project progress falling short of expectations, causing performance to fall short of expectations; 2. Risk of new projects falling short of expectations; 3. Risk of a sharp increase in financial cost rates due to continued increases in interest rates; 4. Systemic risk of a large market system.