Company News Kangda Environmental (Kangda) announced after the market closed on August 10 that Mr. Li Gang, the company's financial director, resigned for personal reasons. We attended the company's analyst conference call this morning regarding the resignation of the financial director. Mr. Li Gang explained that his decision was based on family reasons and that he did not disagree with the company. At the same time, Kangda appointed Mr. Lee Siu-leung as Deputy Director of Finance. Mr. Li Zhaoliang has accumulated rich experience in accounting and finance in various subsidiaries of China National Petroleum Corporation. Kangda will hold a 2016 interim results conference on August 23, 2016 from 10:00 a.m. to 11:00 a.m. at Mandarin Oriental. Comment: Although Mr. Li Gang's resignation may affect the market's investment sentiment in Kangda in the short term, we believe this will have limited impact on the company's long-term fundamentals. Kangda (1) has a high volume of guaranteed treated water under the franchise agreement; (2) its business covers 10 provinces; (3) core profit growth rebounded in 2016; and (4) gross margin is higher than that of its peers, so we think it is unreasonable that the company's predicted price-earnings ratio for FY17 is 5.9 times lower than the average of its peers by 12.3 times. Reiterate the buy rating.