Incident: On the evening of March 28, the company released its 2013 annual report: achieved operating income of 3,517 billion yuan, a year-on-year decrease of 32.24%; net profit attributable to shareholders of listed companies was 1,379 million yuan, an increase of 1.97% over the previous year; net profit attributable to shareholders of listed companies after deduction was 791 million yuan, an increase of 55.35% over the previous year, and EPS of 0.46 yuan. The company plans to pay 1.5 yuan (tax included) for every 10 shares. Comment: In the year of business integration, net profit after deducting non-profit increased by more than 50% year on year. The main reason for the year-on-year decline in the company's revenue in 2013 was a decrease in the carry-over area of real estate sales compared to the same period last year, leading to a 37.87% year-on-year decline in real estate sector revenue; second, the company purchased 100 shares of Shanghai Environmental Oil Development Co., Ltd. in August 2013; third, the company sold the combined sewage phase I asset system in 2012 and had no water revenue for 13 years. The main factors that net profit after deducting more than 50% year on year increased by more than 50% year on year is that the gross margin of the real estate business increased sharply by 27.42 percentage points year on year, driving the company's overall gross margin to increase 19.48 percentage points year on year to 39.64%; second, investment income as a share of total profit fell from 81.79% last year to 51.04% in 2013. The environmental protection business is developing steadily, and the total waste-to-energy processing capacity is nearly 14,000 tons/day. In 2013, the company's environmental protection business segment achieved revenue of 740 million yuan, an increase of 30.43% over the previous year. The main reason is that the design revenue of the environmental engineering project that the company placed in the Academy of Environmental Sciences in August '13 increased compared to the same period last year; second, the Qingdao waste-to-energy project was put into operation in March '13; and the third is that the Weihai waste-to-energy project was put into operation in September '12 and operated throughout '13. Currently, the company has officially put into commercial (trial) operation 5 waste incineration projects: Jiangqiao, Chengdu, Weihai, Qingdao, and Jinshan; 3 projects under construction: Zhangzhou, Nanjing, and Taiyuan; in 2013, 2 new projects were added: Tianma in Songjiang and Dongshitang in Fengxian. The company's total waste-to-energy processing capacity is nearly 14,000 tons/day. In 2013, the total amount of garbage treated reached 2.2458 million tons, and sold 396.8 million kilowatts of electricity online. In 2014, the company plans to introduce core technology in key links, extend upstream in the industrial chain, comprehensively build “CIMO” capabilities, change the business model, and share the benefits of the middle and high-end parts of the environmental industry value chain. Transformation and reform take time, and leading enterprises in the environmental industry are established long-term strategies. It is an objective fact that the company's share of environmental business revenue is still low. Increasing its share requires process, but the company's established strategic direction is to build a “first-class domestic and leading international” environmental industry leader. At present, Hong Yi's share transaction has been completed, and Jiang Yao, an expert in state-owned enterprise reform, has officially taken office as the new chairman of the board, and the foundation for the company's transformation and reform is gradually being consolidated. In 2014, the company will actively study and implement a short, medium, and long-term incentive and restraint system that combines incentives and restraints, and matches remuneration and performance to provide institutional guarantees for improving the company's competitiveness and performance. Profit forecasting and valuation. It is estimated that the company's diluted EPS in 14-16 will be 0.58, 0.74, and 0.92 yuan respectively, corresponding to 13, 10, and 8 times PE. Maintain a “Highly Recommended” rating. Risk warning: The risk of environmental business falling short of expectations, and the risk of real estate regulation.