Operating revenue was the same as last year. In 2015, Kangda Environmental's annual operating revenue reached 1.84 billion yuan (RMB, same below), which was basically the same as in 2014, up only 1.3%, and fell short of expectations. This was mainly due to a decrease in the number of new BOT projects started in 2015, reflecting intense competition in the wastewater treatment market, which led to a slowdown in the pace of company expansion. The company's construction revenue decreased by 160 million yuan, which greatly offset the increase in the company's operating and financial income (divided into 100 million yuan and 86 million yuan). On the other hand, the company realized gross profit of 870 million yuan, an increase of 20.5% over 2014. Gross margin increased by 7.6 percentage points to 47.6%. The improvement in gross margin was mainly due to i) a decrease in construction operations with lower gross margins, and ii) an increase in the gross margin of BT operations from 58% in 2014 to 70%. The reason is that the gross margin of the 2015 Wendeng BT project was higher than that of Jilin BT in 2014. Net profit attributable to the company's shareholders was 320 million yuan, an increase of 10.2% over 2014. Basic earnings per share were 15.71 points. The business expansion was lower than expected. The company is China's leading private company that invests in and operates wastewater treatment facilities. It mainly provides customers with customized and comprehensive sewage treatment solutions and services using BOT and TOT models through service patent management arrangements. According to data from Frost & Sullivan, as of December 31, 2013, the company had the largest total daily wastewater treatment capacity in operation among private sewage investment and operation service providers in China; with daily treatment meters in operation, it accounted for about 1.0% of China's urban wastewater treatment market. By the end of 2015, the company had a total of 76 projects under construction and operation, including 75 wastewater treatment plants and 1 water supply plant, covering 10 provinces and municipalities in mainland China. The total daily sewage treatment capacity was about 2,777 million tons. The total daily processing volume was increased by 30.5 million tons, an increase of 12% year-on-year, which is far lower than the company's previous estimate of increasing the total daily processing volume by 100-150 million tons in 2015. The main reason for not meeting the expected target is that since the company went public in July 2014, it has focused its strategic development direction on competition for large-scale wastewater treatment projects. However, large-scale projects are often fiercely competitive, and the required time cycle is longer, causing the scale of new projects in the first half of 2015 to fall short of expectations. The company made timely adjustments to its strategy in the first half of 2015, and will move its expansion focus back to the small and medium-sized wastewater treatment project area with rich experience. From January to May 2016, the company won a total of 3 new BOT projects, increasing the total daily processing volume by 60,000 tons. The company stated that the target set for 2016 is to add 800,000 tons of total processing volume per day. Currently, most of them have reached the final stage and are basically waiting for the final signature. Therefore, it is anticipated that a large number of projects will be launched in the second half of 2016. On the other hand, the company has 17 BOT projects under construction, most of which will be put into operation before the end of 2016, and future operating income is expected to increase significantly. The valuation company's current stock price is low, and the valuation level is below the industry average, which fully reflects the company's poor performance in 2015, and there is limited room for further decline in stock prices. Following i) the gradual implementation of the target set in 2016 and ii) the company's largest shareholder actively increased its holdings of the company (from January to May 2016, a cumulative repurchase of 0.99% of the company's shares at an average of HK$1.67 per share) to help investors re-establish their confidence, we gave the company a target price of HK$2.2, equivalent to 11 times P/E in 2016, maintaining a “buy” rating. (Current prices as of June 1) Risk indicates that competition in the water market is intense, and the number of new items added has declined