Key investment events: The company and Henan Water Resources Investment Group signed a “Strategic Cooperation Agreement” to agree on strategic cooperation on construction projects such as garden construction, water conservancy, urban water services and water resource extension industries, and sponge cities in Henan Province. The estimated investment amount for the cooperation project is about 20 billion yuan. Our comment: Strong alliances, the Henan Water Resources and Water Services Market is worth looking forward to: The company and Henan Water Resources Investment Group reached an agreement to cooperate on water conservancy and other projects, and the estimated investment amount for the cooperative project between the two sides is about 20 billion yuan. As a wholly state-owned enterprise under the Henan Provincial State-owned Assets Administration Commission, Henan Water Resources Investment Group has strong strength (as of April, total assets reached 37.3 billion yuan, net assets of 16.7 billion yuan), has professional advantages in water conservancy and water services in the region, and can complement the company's advantages. In addition to the strategic cooperation agreement previously signed between the company and Henan Water Resources Bureau 1, we believe that after achieving a strong alliance with Henan Water Resources Bureau 1 and Henan Water Resources Investment Group, the company can occupy an advantageous position in the Henan Water Resources and Water Resources Market. Furthermore, the company has recently signed a framework agreement with the Ye County Government for a comprehensive environmental treatment project (investment amount of about 500 million yuan), which is expected to have a demonstration effect in the Henan region, and future development is worth looking forward to. Build a comprehensive environmental platform and expect PPP orders to improve performance: Through the acquisition of Blue Sky Environmental Protection and Integrated Hydraulic Platform Innogreen, the company has now formed a comprehensive environmental service platform for flue gas+water+solid waste. The Blue Sky environmental protection project has rich experience and strong technical strength (based on Zhejiang University). Innogreen's business covers all areas of water treatment. It has many patented technologies and rich project cases, and can easily meet all kinds of comprehensive environmental protection orders. The company has signed a number of PPP projects since 2015, and its ability to take orders is outstanding. Coupled with the new shareholder Fengli Capital's rich industrial resources, future PPP orders may exceed expectations. The new shareholder increase and incentives showed confidence: the company changed the majority shareholder to Fengli Wealth in June 2016. After the new shareholders were in place, they first introduced equity incentives, granting 13 million stock options to 189 people, including the company's directors, senior management, middle management, core business personnel, and key subsidiary managers, at an exercise price of 7.53 yuan/share; then recently announced plans to increase their holdings by no less than 100 million yuan. The company's actual controller, chairman, Ms. Mao Fengli, and other directors, supervisors and senior management of the company planned to increase their holdings by no less than 100 million yuan within 12 months No higher than The 1 billion company shares (maximum holding price of 15 yuan/share) shows the management team's confidence in the company's future development. Investment suggestion: Fengli Capital, the new shareholder of the company, is rich in industrial resources and is expected to bring vitality and diversified financing channels to Kerong. The company has formed an environmental management platform, and has formed a strong alliance with Henan Water Resources Investment Group and the First Water Resources Bureau, which is expected to open up the Henan Water Resources and Water Services Market, and future development is worth looking forward to. We expect EPS of 0.40 and 0.75 for 2017-2018, and corresponding PE of 20X and 11X. Risk warning: orders fall short of expectations, project construction progress falls short of expectations