In 2013, the company achieved operating income of 734 million yuan, an increase of 8.18% over the same period last year; operating profit of 33.2572 million yuan, an increase of 85.12% over the same period last year; net profit belonging to the owner of the parent company was 18.8204 million yuan, an increase of 3.24% over the same period last year; and basic earnings per share was 0.07 yuan. Profit distribution plan: it is proposed to distribute 0.5 yuan (including tax) for every 10 shares on the basis of 285 million shares of total share capital at the end of 2013.

The performance is growing steadily. The company is mainly engaged in water supply and sewage treatment business in Zhejiang Province, with a water treatment capacity of 1.65 million tons per day (water supply capacity of 1.43 million tons per day, sewage treatment capacity of 220,000 tons per day). During the reporting period, operating revenue grew steadily by 8.18%, mainly due to an increase of 8.65% in water treatment business, which accounts for about 72% of revenue, and 5.98% in pipeline installation business, which accounts for about 20% of revenue. Operating profit rose 85.12% year-on-year, mainly due to a low base in the same period last year, coupled with a slight increase in gross profit margin of 0.4 percentage points year-on-year to 39.17%, and a 4.8% year-on-year decline in expense rate to 33.40%. The net profit attributed to the parent company increased by only 3.24% compared with the same period last year, mainly due to a decrease of 4.6 million yuan in net non-operating income from the same period last year, a decrease of 55.89%, and a decrease in minority shareholders' rights and interests to 9.3 million yuan from-12.52 million yuan in the same period last year.

Stripping off the non-performing assets of real estate and private placement will enhance the strength of water treatment business. The company's water conservancy real estate company has continued to lose money in recent years, which has lowered the overall performance of the company. At present, the company has signed an agreement to transfer its 51% stake, and the transaction is expected to contribute 63 million yuan. Due to the greater uncertainty in the implementation of the agreement, the income was not determined during the reporting period, and the profit forecast will not be taken into account for the time being. Since the State Council formally approved the establishment of Zhejiang Zhoushan Islands New area in July 2011, the scale of the company has been unable to meet the rapid increase in water treatment demand. Therefore, the company plans to issue an additional 745 million yuan to increase the water treatment capacity in Zhoushan by 120000 tons per day, transform the advanced sewage treatment project and build a water pipeline project. The project has been accepted by the CSRC, and if completed, it will help to improve the company's water supply layout in Zhejiang Province, and enhance the company's anti-risk ability and overall competitiveness.

The restart of IPO and the expansion of the new third board will help to increase the return on investment. Zhejiang Paradise Silicon Valley Asset Management Group Co., Ltd. is one of the largest venture capital companies in China, with the number of investment projects and funds in the forefront of well-known venture capital. The company holds a 27.9 per cent stake in Paradise Silicon Valley and its investment income accounted for 94 per cent and 88 per cent of total profits from 2011 to 2012, respectively. The suspension of IPO has led to a continuous decline in investment income, which was only 3.28 million yuan in 2013, accounting for 9 per cent of total profits. At present, the market value of shares in listed companies held by Paradise Silicon Valley is more than 700 million yuan, as well as a number of meeting projects, mergers and acquisitions and so on. It is expected that with the restart of IPO and the start of the national expansion of the new third board, Paradise Silicon Valley will be the first to benefit from the industry recovery, thus driving the growth of the company's investment income.

Earnings forecast: the company's EPS from 2014 to 2016 is expected to be 0.11,0.14,0.18 yuan respectively. Based on the latest closing price per share, the corresponding dynamic P / E ratio is 70 times, 56 times and 44 times respectively. Considering the steady growth of the company's water business and the resumption of IPO will benefit the investment income of Paradise Silicon Valley, the company's investment rating was upgraded to "overweight".

Risk hint: the project construction and production are not up to the expected risk; the venture capital business income is not up to the expected risk.