Key investment events: 1) The company signed a cooperation agreement with the Liupanshui Liuzhi Special Administrative Region Government to invest 1 billion yuan in the Liuzhi Special Administrative Region water project. 2) Invest 4.9 million yuan to establish a joint venture with Jiujiang City Jiucheng Environmental Protection (a wholly-owned subsidiary of the Jiujiang State-owned Assets Administration Commission) to expand the local environmental protection market. Our comments on this are as follows: Cross-regional water PPP projects are expanding at an accelerated pace, with a total investment of 1.8 billion yuan. The company has an active PPP project of 1.8 billion yuan, which is three times its revenue in 2015, bringing strong performance flexibility. Currently, the company's ongoing projects cover Shandong Province, Hunan Province, Guizhou Province, Jiangxi Province, etc., and are expanding smoothly across regions. Increase mergers and acquisitions, strengthen the membrane industry chain, and supplement water services qualifications. 1) Additional acquisition plan: issue price of 15.22 yuan/share, additional number of shares to be purchased and issued 72.83 million. The acquisition of 100% of Jiangsu Kemi's shares, with a total consideration of 1.01 billion yuan, of which 750 million yuan (corresponding to 49.27 million shares) and 257 million yuan in cash; the acquisition 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 is no more than 24.83 million shares, and the total amount of supporting capital raised is not more than 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. The membrane industry chain is complete. 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 Jinqiao Water Department's main camp, urban sewage industry wastewater treatment, water purification plant and sewage plant operation management. 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. Jinmembrane Technology is expected to receive further strategic cooperation and financial support from SDIC. Profit prediction 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 6.7 billion yuan, which is estimated to be 32 times the valuation in '17, which is at the bottom of history. The ban on the company's issuance of additional shares in 2015 will be lifted in December of this year. The current price is a 32% discount compared to the 2015 offer price of 26.52 yuan/share, which is close to the 2016 increase of 15.22 yuan/share. I recommend focusing on it! Risk warning: The progress of additional issuance is lower than expected