Incident: Feida Environmental today announced its annual report, achieving operating income of 1.96 billion yuan, an increase of 17% over the previous year, net profit attributable to shareholders of the parent company of 0.4 billion yuan, an increase of 111% over the previous year, and a comprehensive gross margin of 16%, an increase of 0.2 percentage points over the previous year. Basic earnings per share are $0.21. The dividend plan is to distribute 1 yuan (tax included) to 10 shares and transfer 10 shares. Comment: The company achieved an increase of 0.2 billion yuan in attributable net profit in 2013 (up 111% year on year), mainly from two aspects: (1) Benefiting from domestic environmental protection bid increases, orders grew rapidly, and operating income increased by about 300 million yuan over the same period last year. (2) The reduction in the scale of loans and the reduction in interest expenses led to a year-on-year decrease of $225 million in financial expenses. Furthermore, due to the increase in government subsidies, non-operating income increased by 73% year-on-year (but still slower than the growth rate of operating profit, which was 99%), accounting for 21% of total profit, and the contribution to performance was still significant. Considering the development of Feida's own main business, it is expected that net profit attributable in 14/15 will achieve rapid growth of 90% and 40%. If this merger succeeds, it will provide new impetus for the company's development after 16 years. For example, we estimate that the performance growth rate mentioned above is 0.38 yuan and 0.53 yuan for EPS in 14-15 respectively. As a provincial environmental protection integrated platform company, there is still room for further increase in market value, which deserves long-term attention. It is 42 times the target dynamic of PE in 2015, corresponding to the target price of 22 yuan, and has been rated as an increase in holdings for the first time.