The performance of key investment points slightly exceeded expectations. In 2015, the company achieved operating income of 1,558 billion yuan (RMB, same below), a year-on-year increase of 41.6%; net profit of 286 million yuan, a year-on-year increase of 71.7%; and basic earnings per share of 0.27 yuan, which slightly exceeded our expectations, due to the large scale of financial subsidies (69 million yuan). Among them, operating income was 1,083 billion yuan in the second half of the year, an increase of 128.1% over the previous month; net profit was 239 million yuan, an increase of 407.4% over the previous year; and centralized settlement of engineering projects in the second half of the year and confirmation of listing expenses in the first half of the year were key factors in the good performance of 2015 H2. The company plans to pay a dividend of $0.1 per share. The cost control over the period is relatively good, and the capital is sufficient to help development. Water supply revenue of $455 million (+110.5%) and construction and equipment sales of $597 million (+27%) were the main drivers of revenue growth in 2015. The gross margin increased 2.3 percentage points from 2014, mainly due to the increase in water costs and the increase in the proportion of membrane products and equipment provided. In terms of period expenses, the confirmation of one-time listing expenses led to a 44% increase in sales expenses in 2015 to 181 million yuan, but efficient management kept the management expense ratio (11.6%) basically the same compared to 2014, and the increase in the scale of debt due to the increase in the project led to a rise in net financial expenses of 30.8% to 41 million yuan. Successful listing financing has led to plenty of cash on hand. According to cash estimates of 1,672 billion yuan in accounts at the end of the period, it is estimated that about 1 billion yuan of capital raised has already been used for expansion projects. Moving from the region to the whole country, an era of leapfrog development has arrived. A successful listing effectively boosts the company's popularity and provides much-needed capital for expansion. In the second half of 2015, while consolidating its leading position in Yunnan Province, the company actively expanded markets outside of the province. It actively explored and achieved good results through new bids, mergers and acquisitions in Shandong, Jiangsu, Fujian, Anhui, Hunan, Xinjiang, etc., and its business reach continued to expand, thus moving towards a national layout based on Yunnan. The company has extensive experience in the PPP field and has signed a number of cooperation agreements in Fujian Province, Renhuai in Guizhou, and Changde, Hunan, etc., to cooperate with local government departments in the fields of sewage treatment, watershed treatment 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 the province, and is expected to cultivate new performance growth points in the region. Solid waste and hazardous waste are laid out, and a comprehensive platform is gradually being formed. Less than a year after the company went public, it has announced the acquisition of six major projects, with a total amount of 1,961 billion yuan. Through the acquisition of waste power generation projects in Ningde and Fu'an, and hazardous waste projects such as Shandong Tengyue and Zhengxiao environmental protection, the company's business field has successfully expanded from the water sector to solid waste fields such as hazardous waste treatment and waste-to-energy generation. While forming new profit growth points, a comprehensive environmental protection platform has also begun to take shape. Specifically, the Tengyue Hazardous Waste Phase II project (250,000 tons) is under construction and will be put into operation in 2016 Q4, while the Zhengxiao Environmental Protection Plan expands production capacity to 80 tons/day; it is estimated that the hazardous waste projects are expected to contribute 0.60/110 million yuan in net profit from 2016 to 2017, respectively. Risk warning. Projects under construction have not progressed as expected; external mergers and acquisitions are progressing slowly; there is a risk of repayment of accounts receivable; factors such as tight land finances may have led to a decline in the government's willingness or ability to pay, etc. Maintain a “buy” rating. Considering that the performance that exceeded expectations was mainly due to project financial subsidies, we kept the performance forecast of 0.36/0.47 yuan from 2016 to 2017 unchanged, and added 0.56 yuan to the 2018 performance forecast. The corresponding P/E of the company's current stock price is 10/8/6 times, respectively. The company's performance is growing rapidly, membrane treatment technology advantages, and rich experience in the PPP field, but considering the high share of volatile project revenue, referring to the situation in the industry and comparable companies, we gave a target P/E of 15 times for 2016, corresponding to HK$6.4, maintaining a “buy” rating.