Matters: The company issued an announcement stating that since it won the tender requirements for the “Tonghai County Second Sewage Treatment Plant and Supporting Pipeline Project PPP Project” (later “Tonghai County PPP Project”) on December 15, 2016, the company plans to jointly invest in the implementation of the Tonghai County PPP project and invest in the establishment of a PPP project company with Tonghai County State-owned Assets Management Co., Ltd. (later called “Tonghai State Company”). The registered capital of the project company is 279.412 million yuan, and the total project investment is 174.026 million yuan. Using the BOT operation method, the project construction period is 13 months, and the operation period is 30 years. A PPP project company was established to enhance the certainty of performance. The company plans to jointly invest in the implementation of the Tonghai County No. 2 Sewage Treatment Plant and supporting pipeline network project PPP project with Tonghai State Company, and invest in the establishment of a PPP project company. The registered capital of the project company was 279.412 million yuan, of which the Tonghai State Company contributed 9.5 million yuan on behalf of government capital, with a shareholding ratio of 34%; the company invested 18.4412 million yuan, with a shareholding ratio of 66%. The construction period of the project is only 13 months. It is expected that part of the construction revenue will be carried over during the year, which will benefit the company's performance this year and greatly enhance the certainty of the company's performance growth. Entering the field of sewage treatment, the ecological platform has made great strides forward: the Tonghai County PPP project uses the BOT operation method, and the Tonghai County Housing and Construction Bureau grants the project company to invest, build, and operate this project through a PPP project contract. It also provides sewage treatment services and charges sewage treatment fees according to the number of services; the government pays performance fees through assessment of the quantity and quality of sewage treatment. After the contract expires, project assets are transferred free of charge to the government or other agency designated by the government. The total investment of the project was 174 million yuan, of which the sewage treatment plant invested 152 million yuan, accounting for 87.53% of the total investment; the Sijie Town supporting pipeline network project invested 22 million yuan, accounting for 12.47% of the total investment. The project is the company's expansion into the field of environmental protection business. The company has taken a solid step in extending from a single garden business to a “big ecological platform”. It is expected to benefit the company's future performance improvement and explore experience for the subsequent expansion of the “big ecosystem” market. The overall quality of orders is high, and the reversal of performance is accelerating: According to the company's announcement data, the company signed 10 new orders in 2016, with a total amount of 2,528 billion yuan, including 9 projects with a construction period of 3-12 months, with a total amount of 1,208 billion yuan, accounting for 47.8%. The overall project schedule is relatively short. Among them, the company won the bid for the Renli Ancient Town PPP project to build a sponge city in Hedong New District of Suining City in September 2016, with a total investment of 1.32 billion yuan. It has been included in the Sichuan Provincial Project Bank and the PPP Project Bank of the Ministry of Finance. As a local state-owned listed company, the company has four major advantages in PPP business: high order quality, low financing costs, bundling strategy, and repayment guarantee. The company's on-hand orders in 2016 were large, the quality was high, and most of the construction period was short, making the reversal of the company's performance more certain. Investment advice: Buy-A investment rating, target price of 29.05 yuan for 6 months. As the only listing platform under Cloud Investment Group, the company benefits from PPP model promotion, state-owned enterprise reform and ecological restoration management in Yunnan Province. The order amount in hand is large, the quality is high, and the certainty of performance reversal is strong. We are optimistic about the company's state-owned enterprise reform imagination space and continued layout in the field of big ecology, maintaining the company's buy-A investment rating. The six-month target price is 29.05 yuan, which is equivalent to a dynamic price-earnings ratio of 35 times that of 2017. Risk warning: State-owned enterprise reform falls short of expectations, extension development is progressing slowly, risks such as project repayment risks, macroeconomic downturn, litigation and arbitration.