Matters: The company issued a positive profit forecast. It is expected that net profit for the first half of the year will record a significant increase compared to the same period last year. The company believes that the increase in performance in the first half of the year was mainly due to the expansion of the original business and the increase in the contribution of new acquisition projects. Comment: Performance is growing rapidly, and the benefits of epitaxial expansion are based on follow-up research on the company. We expect the company's net profit to return more than 80 million yuan in the first half of the year. As for the reasons: In terms of water services, Qingzhou Water and sewage treatment fee increases for local projects in Yunnan have jointly promoted improvements in water operation performance, while the large number of construction projects has led to a rapid increase in the scale of the engineering business; in terms of solid waste, the waste-to-energy projects acquired by the company in the early stages have been delivered one after another and the waste-to-energy projects in Ningde, Fujian, are expected to contribute 35 million yuan in net profit to the mother in the first half of the year; in terms of hazardous waste, Yunnan Zhengxiao is expected to contribute more than 10 million yuan in net profit in the first half of the year, and the Jinan Hazardous Waste Comprehensive Disposal Center also contributed to profit in the first half of the year. It can be seen from this that emerging business sectors such as solid waste and hazardous waste may have become an important source of growth in the company's performance. Considering that medical waste disposal prices in Jinan may be expected to rise in the second half of the year, Harbin Chenneng University of Technology is about to join forces. It is expected that the company's hazardous waste & solid waste sector will continue to grow well in the second half of the year, laying a solid foundation for high performance. Actively deploy hazardous waste & solid waste to create a comprehensive environmental service provider. Since its listing in May 2015, the company has maintained a “big water business” model covering all raw water, tap water and sewage treatment, while actively improving its business layout through mergers and acquisitions. So far, it has announced 8 mergers and acquisitions, with a total amount of 1,845 billion yuan, promoting the expansion of business scope from the water sector to the field of hazardous waste and domestic waste treatment, and the transformation to a comprehensive urban environmental service provider has begun to show results. At present, the company has 5 hazardous waste treatment projects, distributed in the three provinces of Shandong, Yunnan and Heilongjiang, namely Jinan Solid Waste Comprehensive Disposal Center (incineration 66,000 tons/year, physicochemical 200,000 tons/year), Shandong Dongying Waste Comprehensive Disposal Center (incineration 42,000 tons/year, physicalization, 500,000 tons/year, landfill 42,000 tons/year), Yunnan Zhengxiao (incineration 11,000 tons/year), Harbin Guohuan (incineration 0.68 million tons/year), Harbin National Energy Engineering University (incineration 0.68 million tons/year), Harbin Institute of Technology (incineration of 0.68 million tons/year), Harbin Institute of Technology (incineration of 0.68 million tons/year) 0.98 million tons/year, physical and chemical 0.62 million tons/year), as described above The total processing capacity of the project is 928,000 tons/year, and the company's hazardous waste treatment scale is already at a leading level in China. The current operational treatment capacity is 102,000 tons/year, including 610,000 tons/year for incineration, 31,000 tons/year for physicalization, and 10,000 tons/year for landfill. We expect the company's hazardous waste treatment business to contribute about 60 million yuan in net profit in 2016. The company currently has 3 waste-to-energy projects, located in Fujian and Thailand, with a total treatment capacity of 2,000 tons/day. Currently, the Ningde project (600 tons/day) and the Thailand project (800 tons/day) have been put into operation, and construction of the Fu'an project is about to commence. Among them, the waste disposal fee for a ton of waste-to-energy projects in Thailand is about 50 yuan/ton after conversion to RMB, and the feed-in tariff is about 1.21 yuan/kilowatt after conversion to RMB. Currently, it is operating at full capacity, and profitability is strong. We expect the company's waste-to-energy business to contribute about 50 million yuan in net profit in 2016. Moving from the region to the whole country, the PPP model is expected to continue to push the company to consolidate its leading position in water services in Yunnan Province while actively expanding markets outside the province. It is actively developing markets in Shandong, Jiangsu, Fujian, Anhui, Hunan, Xinjiang and other places through new bids, mergers and acquisitions, etc., and has achieved good results. The business coverage area and fields continue to expand and advance the national layout. By the end of 2015, the total design capacity of the company's sewage and tap water was 2,231 million tons/day, of which the total design capacity of projects outside the province was 721,000 tons/day, accounting for 32.2%, and the share outside the province is expected to increase further in the future. The company has accumulated rich experience in the PPP field. In less than a year since listing, it has signed a number of PPP cooperation agreements in Fujian Province, Renhuai in Guizhou, and Zhanjiang, Guangdong, etc., to cooperate with local government departments in the fields of sewage treatment, watershed management and water supply. Among them, a joint venture was established in Fujian in December 2015 to build an investment, construction and operation platform for water environment and other projects in Fujian Province, and is expected to cultivate new performance growth points in the region. Risks suggest that projects under construction are not progressing as expected, and external mergers and acquisitions are progressing slowly; there is a risk of repayment of accounts receivable; and factors such as tight land finances may have led to a decline in the government's willingness or ability to pay. Maintaining the “buy” rating. Considering that the earnings forecast for this interim report is in line with expectations, the profit forecast of 0.34/0.43/0.52 yuan for 2016-2018 remains unchanged. Currently, the P/E corresponding to the stock price is 10/8/7 times. Taking into account factors such as the company's performance, which is expected to continue at a high growth rate, has advantages in membrane treatment technology, rich experience in the PPP field, current hazardous waste & solid waste business layout results, and is expected to continue to advance in the merger and acquisition strategy, referring to the valuation level of comparable companies, it is given 14 times P/E in 2016, corresponding to the target price of HK$5.48, and maintain the “buy” rating.