Incident: At noon on January 3, the company announced that it received the “Notice of Winning Bid for the Tumshuk Construction Project of the Third Division”, confirming that the company was the winning bidder for the “Tumushuke Textile Industrial Park Sewage Treatment Plant PPP Project (Electromechanical Equipment and Services)” of Xinjiang Hongda Huanneng Water Technology Development Co., Ltd. Key investment points: The winning bid amount was 149 million yuan, accounting for 24.64% of the company's revenue in 15 years. The project that won the bid this time is the mechanical and electrical equipment and service section of the 30,000 tons/day sewage plant, which includes various parts such as thick grilles, flocculation sedimentation tanks, air flotation tanks, and MBR tanks. The project amount accounted for approximately 24.64% of the company's revenue in 15 years. At the same time, the project cycle is 10 months. If implemented successfully, it will have a positive impact on the company's 17-year performance. Recently, the expansion of off-site projects has accelerated markedly, and there are plenty of orders in hand. Currently, the company is actively expanding from other locations. In June, it won the bid for the Ningxiang PPP project; in August, it won the bid for the Xi'an Weibei EPC project and signed a PPP investment framework agreement in Ziyun County, Guizhou. In December, a joint environmental protection company was formed with Jiucheng, Jiujiang City, and a cooperation agreement was signed in Guizhou. Now, in June, the project has won a bid of about 540 million yuan, and the cooperation framework agreement is about 1.5 billion yuan. The company's engineering business revenue in 2015 was only 435 million yuan, and future performance is very flexible. In the process of acquiring Jiangsu Kemi and Jinqiao Water Science, there is strong collaboration, and they are optimistic about the company's development. The company plans to acquire 100% of the shares of Jiangsu Kemi and Jinqiao Water Science for 1,427 billion yuan. Currently, the administrative license application has been accepted by the Securities Regulatory Commission. The merger and acquisition of Jiangsu Kemi will reinforce the technical advantages of the company's membrane products. Jiangsu Kemi is mainly engaged in organic tubular membranes and inorganic ceramic membranes. They are mainly used in food, medicine and other fields. After the acquisition is completed, the listed company will become the company with the most complete membrane technology in China. Jiangsu Kemi promised net profit of 60 million yuan, 75 million yuan, and 93.5 million yuan in 2016, 17, and 18. The merger and acquisition of Jinqiao Water will enhance the company's engineering capabilities. Jinqiao Water Technology has complete qualifications in design, general contracting and engineering consulting, and is a well-known water treatment engineering company in northwest China. The main advantage of traditional technology is tap water treatment. It has relatively good effects on water with high turbidity in the northwest region. After the acquisition is completed, the engineering qualifications of listed companies have been completed, and engineering capacity has been enhanced. At the same time, the sewage treatment technology of listed companies is also expected to enhance the competitiveness of Jinqiao Water Technology in the sewage treatment market. Jinqiao Water Science promised net profit of 25 million yuan, 32.5 million yuan, and 42.25 million yuan in 2016, 17, and 18. The completion of the merger and acquisition will significantly enhance the company's profitability. At the same time, business collaboration is strong, so I am optimistic about the company's further engineering expansion in the future. Maintain a “Recommended” rating. Assuming that the company completes the acquisition in mid-'17, the merger begins in July. The company's 2016-2018 EPS is expected to be 0.22, 0.50, and 0.90 yuan respectively, corresponding to the current stock price in 2016-2018, and the price-earnings ratio of 85, 38, and 21 times, respectively. Considering that the company's membrane products have core competitiveness, there is strong business synergy with the target after the merger and acquisition is completed, so there is plenty of room for future performance development, and the “recommended” rating is maintained. Risk warning. The ban on restricted shares was lifted; project progress fell short of expectations; acquisitions and integrations fell short of expectations, etc.