Performance was in line with expectations, and the engineering business became the main contributor to the company's profit ① The company's 16H1 achieved revenue of 574 million (+55.85%) and net profit of 171 million (+51.94%), and the net profit growth rate was at the lower end of the performance forecast period; the main reason for the increase in performance was the 147.28% increase in the engineering and installation business revenue of the subsidiary municipal engineering company. ② Tap water and engineering business accounted for 40% and 57% of revenue respectively, and engineering business revenue surpassed tap water business for the first time and became the main contributor to company performance; ③ The company's profitability was outstanding, 16H1's overall net profit margin was 29.85% (-0.77pct), and the overall gross profit margin was 53.47% (-2.97pct), of which the gross profit margin of the tap water business was 49.95% (-4.37pct), and the gross profit margin of the engineering business was 5886.% (-2.77pct). There are plenty of on-going project orders, and the engineering business is expected to maintain the 2016 H1 revenue of the high-growth subsidiary Municipal Engineering Company of 390 million yuan and net profit of 124 million yuan; uncompleted project orders at the end of the 16H1 period are about 1.36 billion. Large-scale projects include emergency backup water source projects, advanced treatment and renovation projects for Xiaowan Water Plant, and new business housing projects. The water supply business is running steadily, and the ratio between production and sales remains at the top level in the industry. 16H1 has an average daily water supply volume of 701,500 cubic meters and completed sales volume of 11.6.77 million cubic meters (+4.67%), accounting for 53.08% of the annual plan; the production and sales margin is 8.53%. The advantages of water source quality+quality management+water informatization have kept the company's production and sales margin at the first-class level in the industry, which is the first batch of benchmarks in the industry. The preliminary work of the hazardous waste treatment company is progressing smoothly, and the sewage treatment business is actively expanding ① Hazardous waste business: Splendid Jiangnan Company has initiated preliminary work such as the EIA of the Qinwangshan Industrial Waste Comprehensive Utilization Project in Jiangyin City, and the preliminary work is currently progressing smoothly. ② Sewage treatment business: Huangtang Sewage Treatment Company concentrated on surveying enterprises and signed sewage treatment contracts with 141 companies. The contract amount increased 25% over the same period last year; the Nanzha Sewage Treatment Plant undertook the construction of internal sewage networks for 16 new enterprises, and both sewage plants have completed the price adjustment of industrial wastewater treatment fees. Cash in hand is abundant, and continued expansion can be expected ① In 2015, the company acquired some of the assets of Huangtang Sewage Company to develop the sewage treatment market. Jiangyin and surrounding areas have sufficient water treatment assets, water supply and sewage capacity of nearly 4 million cubic meters per day, and there is plenty of room for expansion of water services. ② Invest 10 million dollars to establish Jinxiu Jiangnan Company to participate in hazardous waste and solid waste business. Continued expansion can be expected. Further expansion was fully supported by $1.17 billion in cash on hand. Profit forecast We expect the company to have EPS of 0.38/0.45/0.54 yuan in 16/17/18, and PE 23/19/16 times. High growth in engineering business, steady water business, active promotion of sewage and hazardous waste business, sufficient cash can be expected, and “buying” can be expected to maintain “buying”