A plan for the acquisition of Jiangyin Yitong Environmental Protection was introduced: it is proposed to purchase 100% of the shares of Jitong Environmental Protection held by Zhao Haihao and Liu Ling in cash and by issuing shares, and to raise supporting capital. Together, Environmental Protection's 100% equity valuation is $325 million. Of this amount, 220 million yuan was paid by issuing shares, and a total of 29,609,690 shares were paid to the original controllers of the same environmental protection, based on the issuance price of 7.43 yuan/share. At the same time, it is planned to raise 105 million yuan in supporting capital from no more than 10 other specific investors to be paid in cash to counterparties. The counterparty promised that the net profit for 2014, 2015, and 2016 would not be less than 30 million yuan, 35 million yuan, or 40 million yuan. Yitong Environmental Protection Business Centralized Desulfurization and Desulfurization: Yitong Environmental Protection is a comprehensive environmental protection company that provides integrated solutions for energy saving and emission reduction for industrial enterprises with high pollution and high energy consumption. Major projects include desulfurization and denitrification, electric dust removal and exhaust gas recovery. In 2013, it achieved operating income of 18.27 million yuan and net profit of 17 million yuan. The growth rate of operating income was 170.80%, and the growth rate of net profit was 229.38%. Emission standards for compulsory desulfurization and desulfurization for high-polluting enterprises such as steel and cement in China are expected to be introduced. Together with environmental protection, steel companies have certain technical advantages in the desulfurization and desulfurization market, and are expected to benefit from the implementation of mandatory emission standards. The refining project in Xinjiang is expected to make a breakthrough, and profit will increase after asphalt becomes self-sufficient: Baoli Petrochemical will invest in the construction of a “project that processes 2 million tons of heavy crude oil a year to produce 1 million tons of heavy crude oil and redistribute 1 million tons of petroleum asphalt” in the Laisu petrochemical industrial zone in Luntai County. Crude oil quotas will be supplied by Sinopec Tahe Oilfield, and the company is actively implementing crude oil resource quotas. Once the project is put into operation, the company will enter the refining business, and the raw asphalt will be produced on its own. Costs will be further reduced, and profitability will increase markedly. Due to the insufficient supply of asphalt in the Xinjiang region, transportation from outside the country is needed. At the same time, highway construction in Xinjiang has entered a stage of rapid growth, and demand for asphalt continues to grow. Investment advice: We expect the acquisition together with Environmental Protection to be completed by the end of 2014, and the performance contribution will begin in 2015. The company's earnings per share from 2013 to 2015 are expected to be 0.19, 0.24, and 0.34 yuan respectively. The progress made in diversification after the merger and acquisition will benefit from the extension of the industrial chain to upstream refining, with outstanding growth; raising the investment rating to buy-A, with a target price of 9.5 yuan for 6 months, equivalent to the dynamic price-earnings ratio of 28 yuan in 2015. Risk warning: The acquisition is a risk of being approved by the regulatory authorities, and crude oil quotas are difficult to obtain.