Key investment events: The company signed an equity acquisition framework agreement with Yongbao Environmental Protection to acquire 70% of Yongbao Environmental Protection's shares for 385 million yuan. The performance promise is that net profit for 2017 and 2018 will not be less than 45 million yuan or 55 million yuan, and the average net profit will not be less than 50 million yuan. Our comment: Epitaxial mergers and acquisitions are further improving the comprehensive environmental platform: Yongbao Environmental Protection, which the company plans to acquire, is a company specializing in hazardous waste disposal. It has a full-process industrial chain from collection, transportation, pretreatment to disposal and resource utilization, and participated in the construction of the national 863 major science and technology project “Bulk Industrial Solid Waste Treatment and Resource Technology and Demonstration”. It has fully automatic waste cutting fluid harmless disposal technology in the industry. If the acquisition is successfully completed, it will enhance the company's hazardous waste business strength and further improve the company's comprehensive environmental service platform layout for flue gas+water+solid waste. In addition, Yongbao Environmental Protection also promised that the net profit for 2017 and 2018 will not be less than 45 million yuan and 55 million yuan respectively, which will create new profit growth points for the company. Progress continues, and future development is worth looking forward to: The company has continued to move forward in the first half of the year. In March, it signed an industrial investment fund framework agreement with Qinzhi Capital (total scale of no more than 2 billion yuan), and recently signed a strategic cooperation agreement with Henan Water Resources First Bureau and Henan Water Resources Investment Group to further enhance the company's overall competitiveness in terms of capital, technology, and resources. Since 2015, the company has successively carried out several PPP projects, and its ability to obtain orders is outstanding. Recently, it also signed a framework agreement with the Ye County Government for a comprehensive environmental management project (investment amount of about 500 million yuan). Coupled with the rich industrial resources of the majority shareholder Fengli Capital, the future development is worth looking forward to. New shareholders' increased holdings 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 announced a plan to increase their holdings in April. 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 more than 100 million yuan within 12 months, no More than 1 billion company shares (maximum increase 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 governance platform, and future PPP orders will bring high flexibility in performance. We expect EPS in 2017-2018 to be 0.40, 0.75, and corresponding PE is 20X and 11X. Risk warning: orders fall short of expectations, project construction progress falls short of expectations