Key investment matters: The company issued a major contract announcement and signed the “Yunnan Chuxiong Economic Development Zone Project Financing and Construction Agreement” with the Chuxiong Economic Development Zone Management Committee (“Party A”). The projects include the square in front of the North Railway Station and ancillary facilities, Station Front Avenue, and the Shanghai-Hangrui Expressway overpass project, etc., with a total investment of 718 million yuan. Ping An's view: It won a major municipal project order of 718 million yuan. The project amount is large, the quality is high, and the construction period is short, which greatly opens up room for the company to increase its performance in 2017. The total amount of projects signed by the company this time was 718 million yuan, accounting for 85.15% of the company's total operating income in 2015. The main projects of the project were municipal roads and high-speed overpasses. The company extended from landscaping to municipal engineering projects, highlighting its ability to obtain high-quality projects; at the same time, the increase in the proportion of municipal projects will continue to improve the company's profit margin level; at the same time, the three projects under this contract have been started one after another, and the construction period has been completed within 12 months, so the contribution of this project contract performance is mainly reflected in 2017, which guarantees the company's high performance in 2017. The project cooperation model is financing agency construction, and 6% of capital interest returns are high; the Chuxiong Economic Development Zone has a steady fiscal policy and good payment guarantees. The company's cooperation model for this project with Party A is financing agency construction. The project fund of 718 million yuan is raised by the company, and Party A has an annual interest rate of 6% and equal repayment for 7 years. Currently, the benchmark interest rate for loans over 5 years is 4.9%, and the return on capital interest obtained from corporate financing and construction is relatively high; in 2015, the general public budget revenue and expenditure of the Chuxiong Economic Development Zone was 601 million yuan and 609 million yuan, respectively, and the general public budget revenue plan for 2016 was 649 million yuan. The expenditure schedule is 647 million yuan, the local fiscal balance is good, the fiscal policy is sound, and the company's project capital There is a better payment guarantee for recovery. The improvement in the company's net profit margin is combined with order volume, and there is a lot of room for performance flexibility. As a result of the company's historical old accounts, the company's net profit margin level is significantly lower than the industry average. As the company transformed into a state-owned platform, the company's old accounts were gradually liquidated, and at the same time, the company's ability to obtain high-quality orders was highlighted. The company's net profit margin gradually improved. The three quarterly reports showed that the company's gross profit margin was 31.89% and the net profit margin was 5.20%, up 3.77 percentage points and 4.32 percentage points respectively over the previous year. Profitability improved markedly. At the same time, the company's net profit margin still had room to improve by at least 3%. The order was 2,628 billion yuan, 3.12 times the company's operating income in 2015, of which the municipal engineering business was about 1,308 billion yuan and the PPP business order was 1.32 billion yuan. Additionally, the company has a 2.5 billion yuan PPP project framework agreement in Tonghai County. The company's orders have increased significantly, and PPP projects have accelerated, ensuring high growth. Investment suggestions: In 2016-2018, the company's operating income is estimated to be 1,223 billion yuan, 1,712 billion yuan and 2,311 billion yuan respectively, and earnings per share of 0.39 yuan, 0.50 yuan and 0.74 yuan, corresponding to the closing price on December 14. Dynamic PE is 55 times, 42.5 times and 28.8 times, and PB is 4.4 times, 4 times and 3.5 times, respectively. The company's non-public distribution has already passed. We expect to obtain approval around February. After the company's additional issuance is completed, the asset structure will be significantly optimized, and financial cost reduction will help restore profitability. At the same time, as a local state-owned capital platform, it has a strong ability to obtain high-quality orders, and the company's order volume guarantees high performance growth. We are optimistic about the company's subsequent growth, its ecological platform positioning, and future state-owned enterprise reform space, and maintain the “recommended” rating for the company. Risk warning: the risk of collection of accounts receivable, order execution falling short of expectations, slow extension expansion, progress in state-owned enterprise reform falling short of expectations, etc.