Summary:

The investment in forest reform in Fujian Province has reached 350 million, of which the subsidy for business funds has reached 100 million yuan. According to the requirements of the reform implementation document, the forest area of Fujian Province will increase by more than 500000 mu in 2020, the forest stock will increase by more than 13 million cubic meters, and commercial deforestation will be reduced by about 20%.

The company is planning its own PPP strategy according to its geographical location and competitive advantage. From the current model, the participation of social capital is strong, and there are the following modes: one is the infiltration of acquisition territory; the second is the infiltration of building factories in production areas; the third is the infiltration at the management level.

The company actively responds to the national policy, and cooperates with Xiamen University to establish a "Intelligent Forestry Comprehensive Laboratory" to carry out "intelligent forestry" in Jinsen, Fujian Province, to build a reserve forest information management system, to carry out information management in the whole process of construction, management and monitoring, and to carry out project cooperation with Fuzhou University to promote the application of UAV in forestry based on remote sensing technology. Participating in the construction of the local forestry information network ensures that the government monitors the whole process of forestry resources, and can clearly grasp the circulation, mortgage and management of forest rights.

From the perspective of long-term planning, we believe that the overall business of the company shows a growth trend, and under the continuous promotion of favorable policies in the near future, there will be explosive growth in the future. however, due to geographical limitations, combined with the current economic downturn, short-term corporate performance release will be limited.

Profit forecast: we forecast that the EPS of the company from 2016 to 2018 will be 0.28,0.40,0.48 yuan respectively, giving a "overweight" rating.

Risk analysis: 1) the risk of market change; 2) regulatory risk; 3) the risk of industrial policy change.