Incident: On January 3, 2017, the company issued an announcement announcing that it won the bid for the “Tumushuke Textile Industrial Park Sewage Treatment Plant PPP Project (Electromechanical Equipment and Services)” of the Third Division of the Xinjiang Construction Corps. The bid amount was 149 million yuan. The winning bid period was to complete equipment installation and commissioning within 10 months from the date the contract was signed. The company's scope of supply for the project mainly included supporting equipment and pipelines related to sewage treatment plants, including MBR pools. Main opinions: 1. The winning bid for the project had a positive impact on the 17-year performance 1) The winning bid amount for this project was 149 million yuan, accounting for 24.64% of the annual revenue in 2015, which will have a positive impact on future results; 2) The project's construction period is short, only 10 months, and it is expected that most of the project profits will be realized in 17 years; 3) According to the announcement, the scope of supply of the company's sewage treatment plant, including MBR pools, is expected to directly drive sales of the company's membrane products. Higher. 2. Asset restructuring progressed smoothly. In September 2016, the company issued an announcement to acquire 100% of the shares of Jiangsu Kemi and Jinqiao Water Technology at a consideration of 1.007 billion yuan and 420 million yuan, respectively, through issuing shares and paying cash. The merger and acquisition of Jiangsu Kemi will make the company the film company with the widest domestic product chain and the strongest R&D strength, opening up a “domestic replacement” market space for high-end membrane products; while the merger and acquisition of Jinqiao Water will complement the company's engineering capabilities, expand the company's business scope, and increase overall revenue and profit volume. This asset restructuring will strategically provide impetus for the company's subsequent development. Up to now, the company's asset restructuring has been approved by the Tianjin Municipal Finance Bureau, the Tianjin Municipal Education Commission, and accepted by the China Securities Regulatory Commission, and is progressing smoothly. 3. The state-owned asset background helps the PPP project to successfully implement this merger and acquisition, and the shareholding ratio of Gaoxin Investment will remain at 14.03% after participating in the fixed increase, further narrowing the gap with the largest shareholder; at the same time, with the Hebei Provincial State-owned Assets Administration Commission, Hebei Construction Water, which has many water assets, will take a fixed increase in shares. Relying on the state-owned assets of the two shareholders, the company's ability to take orders in the PPP field will be greatly enhanced. The company received 2.04 billion yuan in project orders for the full year of '16, including 1.85 billion yuan for PPP projects. It is expected that most of the orders will be converted into revenue and profit within the next 2-3 years, and it is worth looking forward to the accelerated implementation of the performance. Conclusion: The company's asset restructuring project progressed smoothly; it received an order of 2.04 billion yuan in '16, and the performance can be expected to be fulfilled at an accelerated pace; at the same time, it has the characteristics of a small market capitalization and high elasticity, which is worth paying attention to. The company's operating income for 2016, 2017 and 2018 is estimated to be 731 million yuan, 1,402 million yuan and 1,701 million yuan respectively, with net profit of 70 million yuan, 204 million yuan, 279 million yuan, and earnings per share of 0.25 yuan, 0.55 yuan, and 0.75 yuan. Currently, the corresponding P/E for the stock price is 73.61 times, 34.17 times, and 25.02 times, respectively. Maintain a “Highly Recommended” rating. Risk warning: Asset restructuring was not completed as scheduled; PPP project progress did not meet expectations.