Investment highlights: The company recently released its 2015 annual report, achieving operating income of 1,230 million dollars, an increase of 6.53% over the previous year; net profit of 1,484 million dollars, an increase of 98.46% over the previous year. The increase in revenue and net profit was in line with expectations; the growth rate of net profit was significantly greater than the growth rate of revenue, mainly from investment income from GF Securities and others. Comment: Business side: 1) Water: The company's total water supply capacity is 2.35 million tons/day, and the total sewage treatment capacity is 510,000 tons/day; the total water supply accounts for 80% of Zhongshan City, and the total sewage treatment volume accounts for about 35% of Zhongshan City, contributing 633 million yuan and 98 million yuan in revenue respectively. 2) Waste incineration: New business was added and Tianyi Energy was acquired. The processing capacity of the northern group incineration project was 970 tons/day, contributing 27 million yuan in revenue. 3) Market leasing: It has 31 comprehensive farmers' markets, 2 wholesale markets, and nearly 9,000 merchants, contributing 145 million dollars in revenue. 4) Passenger transport business: It holds 60% of the shares in China-Hong Kong passenger transport, owns 5 passenger ships, carries more than 1.2 million passengers a year, and contributes 194 million dollars in revenue. 5) Investment: The company holds 9.39% of GF Securities. Influenced by the big bull market, GF Securities had excellent performance; in 2015, the company achieved a total net income of 1,413 billion dollars in terms of investment, reaching about 95% of net profit. Company highlights: 1) Focus on the core business of environmentally friendly water services; a) Zhongshan's sewage treatment will also implement the “sewage one game of chess” policy, the most promising one is injection into Zhongshan utilities, which is in line with the “one game of chess for water supply” route; b) the price reform guidance requires an increase in sewage treatment fees to benefit the company's sewage business; c) Building an information-based management platform represented by “smart water”, forming an operation control model that can be replicated and exported; d) successfully entering the solid waste treatment field to eliminate waste incineration, leachate, etc. With the franchise for the project, the company has moved towards a comprehensive environmental service provider; e) Already A merger and acquisition fund was set up with Guangfa Securities, with a scale of 2 billion dollars. The main investment lines are energy saving, environmental protection, new energy, etc., to provide project sources for the company's expansion. 2) The fixed increase will help upgrade farmers' business and establish an informatization management network for the farmers' market. Through private fundraising, the company has upgraded some farmers' businesses to create a complex profit model of “operating rights fee+rent+transaction commission+other management fees”. After complete completion, it is expected to bring about 95 million net profits every year. 3) From now on, Zhongshan Port will move eastward, which is beneficial to passenger transport services. It is expected that the number of group passengers on this route will increase. 4) Build a capital platform, form a multi-level investment and financing system, set up a public international public service, and plan to invest HK$2.2 billion as a platform for overseas investment. Profit forecast: The company adheres to the “industrial operation+capital operation” strategy, and the situation where investment income supports performance will not fundamentally change in the short term, but all of the company's main businesses have been developed, especially the environmental protection business, and the main business's support for performance has been strengthened; with a margin of safety, the private raising price in October 2015 was 12.02 yuan/share. We gave Zhongshan Utility an “increase in holdings” rating. The 2016-2018 EPS is expected to be 0.67/0.74/0.82 yuan. Risk warning: Local policies are not progressing according to expectations.