Key investment events: The company issued an announcement on January 3. The company won the bid for the “Tumushuke Textile Industrial Park Polluted Water Treatment Plant PPP Project (Electromechanical Equipment and Services)”, with a bid amount of 149 million yuan. The comments on this are as follows: Municipal industrial water treatment orders are in a two-pronged manner, and PPP orders have reached nearly 2 billion dollars since 2016. Since 2016, the total amount of EPC orders announced by the company is 274 million yuan, and the total PPP order amount is nearly 2 billion yuan. The project is an industrial sewage treatment plant PPP project that the company won the bid for. Municipal administration and sewage have gone hand in hand, and the water treatment market has fully blossomed. Increase mergers and acquisitions, strengthen the membrane industry chain, and supplement water services qualifications. 1) Additional acquisition plan: The issue price is 15.22 yuan/share, and the number of additional shares to be purchased and issued is 72.83 million. The acquisition of 100% of Jiangsu Kemi's shares was worth 1.01 billion yuan, of which 750 million yuan (corresponding to 49.27 million shares) and 257 million yuan in cash; the purchase of 100% shares of Jinqiao Water Technology had a total consideration of 420 million yuan, of which 359 million yuan (corresponding to 23.56 million shares) and 60.97 million yuan in cash. The original shareholders of Jiangsu Kemi were locked in for 36 months. 2) Supporting fund-raising plan: The issue price is 15.22 yuan/share, the number of supporting shares to be issued shall not exceed 24.83 million shares, and the total amount of supporting capital raised shall not exceed 378 million yuan. Of this amount, 318 million yuan was used to pay cash consideration for this transaction, 36.21 million yuan for projects under construction by the target company, and 23.41 million yuan to pay expenses related to this transaction. The lockdown period was 36 months. 3) Jiangsu Kemi, an expert in the entire water treatment membrane industry chain: Jiangsu Kemi specializes in membrane material production, membrane module and complete equipment manufacturing, and overall membrane technology solutions, and has a complete membrane industry chain. Revenue for 2014, 2015, and the first half of 2016 was 96.4 million yuan, 14,403, 69.4 million yuan, and net profit was 1944, 3615, and 17.58 million yuan respectively. Jiangsu Kemi's performance commitment for 2016 to 2018 was 0.60/0.75/94 million yuan, respectively. 4) Water purification sewage treatment expert Jinqiao Water Department: surface water purification at the main camp of Jinqiao Water Division, treatment of municipal sewage industry wastewater, operation and management of water purification plants and sewage plants. Revenue for 2014, 2015, and the first half of 2016 was 9419, 8814, and 58.2 million yuan, respectively, and net profit was 1,082, 1,416, and 8.47 million yuan respectively. Jinqiao Water Engineering's performance commitment for 2016 to 2018 was RMB 0.25/0.33/43 million, respectively. Shareholder backgrounds enhance business development capabilities and help the company take off in the water sector. As a forward-looking strategic industrial investment platform under the SDIC, Hi-Tech Investment will participate in the additional subscription. It will become the second largest shareholder and hold 14.03% of the shares. Energy saving and environmental protection are an important part of SDIC's strategic development. Jinmembrane Technology is one of SDIC's most important environmental listed assets, and Jinmembrane Technology is expected to receive further strategic cooperation and financial support from SDIC. Profit forecast and investment advice: Look at the inflection point in the bottom area. Considering this increase, it is predicted that the company's net profit for exam preparation will reach 1.5/21/270 million yuan in 16-18; currently, the market value of exam preparation is 7 billion yuan, and the estimated 17-year valuation is 33 times higher, which is at the bottom of history. The ban on the company's issuance of additional shares in 2015 was lifted in December last year. The current price increased by 26.52 yuan/share at a 30% discount compared to 2015, close to the 2016 increase of 15.22 yuan/share. I recommend focusing on it! Risk warning: The progress of the additional issuance is lower than expected.