Incident: On the evening of April 30, the company announced the “Report for the First Quarter of 2016”, the “Notice on the Progress of Litigation”, the “Notice of Resolutions of the 20th Interim Meeting of the Eighth Board of Supervisors” and the “Notice of Resolutions of the 20th Interim Meeting of the Eighth Board of Supervisors”. In the first quarter of 2016, the company's operating profit was 462 million yuan, up 36.69% year on year, and realized net profit of 32.2074 million yuan, up 156.61% year on year. The board of directors agreed that the company would donate no more than 680,000 yuan to Xingxing Village, Xinchang Township, Ebian Yi Autonomous County, Leshan City for industrial support and infrastructure construction. Comment: The performance of the first quarterly report increased dramatically, and sales volume of water and electricity increased sharply. In the first quarter of 2016, the company's revenue reached 462 million yuan, up 36.69% year on year. The sharp improvement in performance was mainly due to the year-on-year increase in profits from the company's electricity, natural gas, and tap water business and the sharp year-on-year loss of its subsidiary Leshan Mojiang Coal and Electricity Co., Ltd. during the reporting period due to the completion of personnel placement and disposal of some assets. Among them, power generation reached 96.97 million kilowatt-hours, up 77.99% year on year, electricity sales volume was 613 million kilowatt-hours, up 53.56% year on year, gas sales volume was 34.93 million cubic meters, up 12.75% year on year, and water sales volume was 6.45 million cubic meters, up 6.62% year on year. The sharp increase in power generation and electricity sales is mainly due to the merger of Qianwei County Zhengxin Investment Co., Ltd., a wholly-owned subsidiary. Among them, the profit and loss of non-current asset disposal was 2,474,200 yuan, mainly due to the asset income of the disposal subsidiary Mojiang Coal and Power Company. The government subsidized 136,900 yuan. The verdict was not effective, and the corresponding projected liabilities have been calculated. Recently, the Beijing Higher People's Court handed down a final judgment on the guarantee contract dispute between China Foreign Trade Finance and Leasing Co., Ltd. and the company. The Beijing Higher People's Court ordered the company to pay China Foreign Trade Finance Leasing Co., Ltd. rent of 53.6091 million yuan and 91,185.2 yuan in liquidated damages within 10 days after the judgment came into effect. In the judgment matter of this announcement, the company has already calculated an estimated debt of 53.98 million yuan in 2014 (calculated as of December 17, 2014), and the judgment in effect of this announcement ordered that the penalty should be calculated until payment is made. The portion of the final execution amount exceeding the accrued anticipated liabilities will have an impact on the company's 2016 profit. Electricity price adjustments have had a negative impact on the company's performance. Recently, the company received the “Reply on Issues Related to Electricity Prices in the Peak Valley of Ledian Power Grid in 2016” from the Leshan Development and Reform Commission. The company's power grid suspended sales-side electricity prices (electricity users containing ion membrane chlor-alkali production), Internet-side thermal power peak and dry valley electricity prices, and hydropower peak and valley electricity prices, starting with electricity volume checks in March 2016. Meanwhile, Chuanqian Electric Power Company, a wholly-owned subsidiary of the company, received the Qianwei County Development and Reform Bureau's “Approval on Adjusting Electricity Prices in Fengjiao Peak Valley in Our County”. Starting from April 2016, Chuanqian Electric Power Company suspended sales-side electricity prices on the electricity side; suspended feig-dry valley electricity prices for coal-fired power on the Internet side and peak and valley electricity prices for hydropower; and fully implemented sale-side peak and valley electricity prices. It is estimated that this electricity price adjustment will reduce the company's electricity operating revenue (including Chuanqian Electric Power Company) by about 20 million yuan in 2016, which will adversely affect the company's performance. Promote the bankruptcy of Ledian Tianwei and the asset disposal process of Mojiang Coal and Power Company, and the reversal of performance was established. In 2014, the company's subsidiary Ledian Tianwei and Mojiang Coal Power lost 1,741 million yuan and 179 million yuan respectively, resulting in a net loss of 1,139 million yuan in net profit attributable to shareholders of listed companies. In March 2015, Ledian Tianwei entered bankruptcy and liquidation procedures. It is expected that the company's performance will not be hampered in the future. At the same time, the company accelerated the asset disposal and personnel placement process following the policy closure of the Mojiang Coal and Power Company, which drastically reduced losses to 41.9947 million yuan in 2015. The influence of Mojiang Coal and Power Company on the company's subsequent performance continued to weaken until it no longer dragged down the company's performance. The installed capacity of own power generation has increased, and power generation volume and electricity sales are expected to continue to grow. The installed capacity of the power plants owned and controlled by the company is 1079.35 million kilowatts (all hydropower plants, accounting for 19.89% of the total installed capacity of the power grid). The company's sales are integrated, and the number of hours used per year is high. Its own power generation capacity and total electricity sales are expected to continue to grow. The natural gas business and tap water business are expected to continue to improve. The company strives to expand gas and water supply markets in surrounding townships, actively support and speed up the construction of government projects and shed renovation projects, increase market share, and increase coverage and market share. Currently, the total number of households operating in the company's natural gas business is about 255,189; the total number of operating households in the tap water business is about 14,9681. Participated in Sichuan Shengtian, Sunpower, Apple, etc. to invest in low-power concentrated solar power plants, and the performance is very flexible. Sichuan Shengtian (21.60%), the company's shareholding subsidiary, will cooperate with Apple to build 20MW high-efficiency photovoltaic power plants located in Hongyuan County and Zoige County in Sichuan. When the two projects are completed, they will be jointly owned by Sichuan Shengtian and Apple. Among them, Sichuan Shengtian accounts for 56% and Apple accounts for 44% of the cooperation. With the continuous development of future power plants, the company's performance is more flexible. Maintain a “Recommended” rating. Regardless of factors such as increased distribution and dilution, we expect the company's EPS to be 0.267 yuan, 0.343 yuan, and 0.456 yuan respectively in 2016-2018, corresponding to 31.65 times, 24.64 times, and 18.53 times PE, respectively. Considering that the company's future performance is not dragged down by Ledian Tianwei and Mojiang Coal Power, that there is plenty of room for spontaneous hydropower to replace purchased electricity, and that the performance of participating in photothermal power plants is more flexible, it maintains the “recommended” rating. Risk warning: the risk of electricity sales price reduction; power generation volume falls short of expectations; the progress of power plants of participating companies falls short of expectations; and the natural gas and tap water business is not progressing as expected.