Event: the company announced that the subsidiary Tiantian signed a franchise agreement for the concentrated brine treatment project in Inner Mongolia Dalat Banner Economic Development Zone, which was completed by the end of December 2014.

Impact: the performance of a single project is limited, and the demonstration significance is significant, which helps to obtain more projects. The agreement includes three parts: construction and operation of 6000 t / d concentrated brine treatment facilities, water charges for recycled water after treatment, and government subsidies. Assuming that the load rate of concentrated brine treatment is 80%, and concentrated brine produces 50% recycled water, running for 330 days a year, without taking into account government subsidies, the annual water treatment income is 16 million yuan, and the estimated gross profit is 8 million yuan (50% gross profit margin). Compared with the company's existing business volume, the thickening effect of a single project on performance is limited. We believe that the significance of the project is that outside the increasingly competitive landfill leachate treatment market, it is difficult to enter the industrial concentrated brine treatment field, which is in the initial stage of the market. The demonstration significance of this project can not be ignored and will help Tiantian Company to obtain more similar projects in the future.

It is expected that the "Ten rules of Water" will open up the demand space for industrial wastewater treatment. It is expected that the "Water Ten articles" has entered the final sprint stage before the introduction, and water pollution control will be the focus of the policy. Compared with domestic sewage, the field of industrial wastewater treatment with more debts in the past will release more flexibility. It is expected that after the introduction of the "Ten rules on Water", the demand space for industrial wastewater treatment will be opened up.

Profit forecast and investment advice. The profit forecast of 2014-2016 is maintained, and the EPS is expected to be 0.17,0.31,0.39 yuan respectively. Maintain the target price of 7.75 yuan and maintain the "overweight" rating.

Risk factors. The progress of rural water affairs promotion is slow, and the income of leachate and industrial wastewater is lower than expected.