Incident: The company's revenue and net profit for the first three quarters of 2016 were 1,332 million yuan and 152 million yuan respectively, up 117.85% and 144.64% year-on-year respectively. Due to factors such as G20 meetings in the third quarter and poor order execution, the performance fell 20% below expectations. Key investment points: The company's performance in the first three quarters fell short of expectations. The company's revenue and net profit for the first three quarters of 2016 were 1,332 million yuan and 152 million yuan respectively, up 117.85% and 164.64% year-on-year respectively. The third quarter results fell short of expectations due to factors such as G20 meetings in the third quarter and order execution. The increase in the company's operating income and net profit is mainly due to the merger of the wholly-owned subsidiary Zhongyi Ecology in March, as well as the continued growth in the original dredging business, municipal sewage and industrial wastewater business. The advantages of the entire industry chain layout are highlighted. Furthermore, the PPP order reflects that the company's replication and expansion model has been further verified, and we are optimistic about the release of future performance. The company announced the 2.5 billion dollar framework agreement signed with Zhaoan County in September 2015, and won the pre-bid for the PPP project for the water supply and drainage project on September 28, 2016, with a total investment of 1.12 billion yuan. We anticipate that the 800 million yuan project in Wenzhou on August 22 and the current 1.1 billion Zhaoan project are just the beginning. We hope that in the future, companies will use the PPP industry trend to quickly achieve the continuous release of performance brought about by rapid replication, expansion, and growth through successful cases. It has the ability to undertake general contracting of PPP projects and collaboratively improve net profit margins. After years of mergers and acquisitions to supplement the industry chain, the company has covered a comprehensive range of vertical fields in the water treatment industry chain, making it very few environmental management providers in the market that truly have overall solutions. Moreover, the general contracting model can reduce intermediary links and increase the company's overall project profit margin. Referring to existing cases, the net profit margin of the water treatment turnkey model can be as high as 15-20%. The company's net profit margin in 2015 was 11.7%, and there is still plenty of room for growth. The company is actively expanding through mergers and acquisitions to transform providers and service providers of integrated environmental and energy-saving technology solutions. In 2015, the company invested in the establishment of the Xingyuan Energy Saving Subsidiary, which specializes in the comprehensive treatment and resource recovery of organic waste gas and waste liquid; holds Yinjiang Environmental Technology to obtain its manufacturing capacity for energy saving and water treatment equipment; acquires part of Shanghai Haocang's shares and increases capital to enhance the informatization capabilities of environmental protection business; and acquires Zhongyi Ecology to lay out ecological restoration and landscaping. Holding Hon Hai Environmental Protection, it focuses on serving remote quality control of water quality monitoring equipment; mergers and acquisitions are three times three, which is conducive to market development and the acquisition and implementation of PPP projects; and the Xingyuan Jujin M&A Fund has completed investment in the solid waste industry. At present, the company is gradually completing the upstream and downstream layout of the industry, and is also actively expanding horizontally into hot environmental protection industries, gradually building itself into a provider and service provider of comprehensive environmental and energy saving technology solutions. Investment ratings and valuation: Due to factors such as the G20 meeting in the third quarter and order execution that did not meet expectations, we lowered our net profit for 16-18 to 3.47, 5.98, and 891 million yuan (previously 4.75, 7.17, and 1,018 million yuan). EPS was 0.68, 1.18, and 1.75 yuan/share, corresponding to the 16 and 17 year valuations of 69 and 40 times. We believe that the company uses the capital platform to gradually transform into an environmental protection system integrator and integrated environmental management service provider, relying on its core environmental protection equipment strength. The strategic ideas are clear, PPP orders have great potential in the future, performance growth and market value growth are highly flexible, and maintain a “buy” rating.