Matters: the company released its annual report in 2016, realizing operating income of 392 million yuan, an increase of 18.06% over the same period last year, realizing net profit of 62 million yuan belonging to shareholders of listed companies, an increase of 21.68% over the same period last year, and realizing EPS1.07 yuan per share, down 6.14% from the same period last year. It is proposed to distribute a cash dividend of 2.5 yuan (including tax) for every 10 shares, and to increase 10 shares for every 10 shares. The company released a first-quarter report that realized operating income of 99.038 million yuan, an increase of 8% over the same period last year; net profit of 9.6496 million yuan belonging to shareholders of listed companies, an increase of 11.35% over the same period last year; and EPS0.16 yuan per share, an increase of 14.29% over the same period last year.

Revenue and profit increased steadily, and Q1 continued the upward trend in 2017: in 2016, the company achieved an increase of 18.06% in operating income and 21.68% in net profit belonging to shareholders of listed companies, respectively, and its performance continued to grow steadily. The steady growth of the company's operating income is mainly due to the 18.55% increase in architectural design income, which accounts for 89.17% of the company's revenue. The growth rate of the company's net profit is slightly higher than that of operating income, mainly due to the increase in the proportion of the company's landscape design business income, which makes the company's 2016 gross profit margin improved by 0.55 percentage points. The cash flow of the company's operating activities in 2016 was 102 million yuan, an increase of 245.08% over the same period last year, mainly due to the enhancement of the company's ability to recover money downstream during the reporting period, and the cash received from selling goods and providing services increased by 30% over the same period last year, which was larger than the increase in the company's operating income. In 2017, Q1's revenue and net profit increased by 8% and 11.35% compared with the same period last year. The better revenue growth in the first quarter was mainly due to the combination of Beijing and Shenzhen BiLuther factors (the parent company's revenue was 71.0771 million yuan, an increase of 0.45%; the total revenue of subsidiaries was 18.9609 million yuan, an increase of 50.34%). The company's Q1 revenue increased by 8% in 2017, 4.3% higher than the 3.70% growth rate of 2016Q1 revenue, and the upward trend is expected to continue in the future.

Epitaxial M & A landed to help extend the industrial chain: in 2016, the company used part of the IPO to raise cash and own funds to acquire 51% shares in Shenzhen and Beijing, with a total consideration of 133 million yuan. the acquisition completed the industrial and commercial change formalities in October-November 2016 and completed the merger in November 2016. Shenzhen Bi Luther and Beijing Bi Luther promised that the non-net profit of the merger between 2016 and 2018 would be not less than 20 million yuan, 25 million yuan and 30 million yuan respectively; in 2016, the non-net profit would be deducted from the merger of Beijing Bilud and Shenzhen Bi Luther, with a performance commitment rate of 123.09%. Billoude is a high-end brand of domestic interior decoration design and a well-known brand in the field of interior design, planning and design of high-end star hotels and office buildings. this acquisition will help the company extend its business model from architecture and landscape design to high-end interior design. In the future, the company plans to further strengthen mergers and acquisitions, integrate high-quality resources in the industry, and extend the industrial chain to the upstream and downstream.

Introduce strategic investors to inspire investment, rely on the resource platform to accelerate business development: in July 2016, the company's controlling shareholder, said Investment, plans to increase capital and shares, and introduce strategic investors to enlighten investments. inspiration Investment will hold no more than 27% of Sade Investment; on March 10, 2017, the name of the company was changed to "Enlightenment Design". Enlightening Investment is a subsidiary of Enlightenment Holdings Co., Ltd. Enlightenment Holdings is a comprehensive large-scale enterprise established by Tsinghua University. Controlling shares enlighten more than 500 listed and unlisted enterprises, such as Guhan, Qidi Sand, 21Vianet Group Inc, Beijing Control Clean Energy, Puhua Environmental Protection, etc., with total assets exceeding 100 billion yuan. With the introduction of strategic investors, the company is expected to speed up the national layout and business development by relying on the comprehensive resources platform of Enlightenment Holdings.

Closely follow the strategy of Xiongan New area and lay out a new type of urbanization construction: the company closely follows the national strategy of coordinated development of Beijing, Tianjin and Hebei and the construction of Xiongan New area. at present, the branch in Beijing is about to complete registration. in the future, we will give full play to the company's experience in the construction of Suzhou Industrial Park and its advantages in the construction of science and technology parks, and comprehensively carry out business in Beijing and its surrounding areas. According to the 13th five-year Plan for the Development of Building Energy efficiency and Green Building issued by the Ministry of Housing and Construction in March 2017, it is required to promote building energy efficiency and green building in an all-round way. The company intends to seize the important strategic opportunity of the country to promote new urbanization and green building, give full play to its technical advantages in building energy conservation and green building, and become the beneficiary of green building promotion and the integrator of industry resources.

Investment advice: increase holdings-An investment rating, 6-month target price of 74 yuan. In February 2016, the company was listed on the Shenzhen Stock Exchange, and the first year of listing of the company extended the industrial chain to the field of high-end interior design; the controlling shareholder introduced strategic investors and is expected to accelerate business development by relying on the integrated resources platform. The equity incentive program was implemented in June 2016, covering 9% of the company's employees and targeting middle management and technical personnel, which is conducive to stimulating the subjective initiative and creativity of the company's management team and core business backbone. We are optimistic about the company's development prospects. We expect the company's revenue to grow by 12.0%, 11.8% and 12.1% respectively, and net profit to grow by 46.7%, 12.5% and 13.8% respectively from 2017 to 2019. For the first time, we are given an investment rating of-A, with a six-month target price of 74 yuan, equivalent to a dynamic price-to-earnings ratio of 50 in 2017.

Risk hint: the landing of the fund-raising project is not as expected, the implementation of the strategy of Xiongan New area is not as expected, and the landing of epitaxial mergers and acquisitions is not as expected.