Incident: On July 4, 2016, Shouchuang Environmental issued an announcement at noon. Beijing Capital, a wholly-owned subsidiary of the company, was reviewed through competitive negotiations in the township garbage collection system construction project in Duyun City, Guizhou Province, and was determined as the transaction person for the project. The township garbage collection system construction project in Duyun City uses a BOT franchise model. The franchise period is 30 years, and the garbage collection design scale is 150 tons/day. After the construction of the project is completed, it will basically achieve full coverage of urban and rural garbage collection and transportation in Duyun City, Guizhou. Comment: The township garbage collection and transportation is one more city, and the entire solid waste industry chain is strategically settled uniformly. Previously, Shouchuang Environmental had acquired and operated a 300 ton/day domestic waste landfill in Duyun, and plans to build another 600 tons/day domestic waste incineration plant in Duyun. The winning bid for this collection and transportation project is the first time that the pioneering environment has entered the front-end domestic waste collection and transportation link in Duyun City. At this point, the company has officially formed a closed loop of the entire “sanitation - incineration - landfill” industry chain in Duyun City, marking that the integrated solid waste industry chain production strategy promoted by the company has officially been implemented in Duyun, Guizhou. Although the project is small, it is significant, and the demonstration effect is expected to be promoted. The city of Duyun produces a total of about 675 tons of household waste every day. After the completion of this newly acquired township domestic waste collection and transportation project (150 tons/day), it will achieve full coverage of urban and rural garbage collection and transportation in Duyun, and will be perfectly connected with the terminal treatment process. The collaborative operation of the entire solid waste industry chain will undoubtedly improve the operating quality and efficiency of the entire domestic waste treatment system. Currently, there are a large number of solid waste infrastructure gaps in third- and fourth-tier cities and urban and rural areas similar to Duyun. We expect that the implementation of the Duyun project will have a good demonstration effect, and the pioneering environment is expected to seize market opportunities in the integrated solid waste market in small and medium-sized cities in the future. Investment advice: Based on the total share capital of 14.295 billion shares prepared for the latest exam after asset injection is completed, Shouchuang Environmental's 2016 EPS is about 11 times and PB is about 1.06 times, which is lower than the valuation center of Hong Kong stock environmental 20 times PE. Under the company's integrated solid waste strategy, the medium- to long-term prospects are improving. New projects will continue to be catalyzed in the future, and they may enjoy a certain valuation premium. Investors are advised to pay active attention. Risk warning: New projects fell short of expectations, and the RMB and New Zealand dollars depreciated against the Hong Kong dollar.