Incident: On the evening of September 29, the company issued an announcement: 1) The company set up a subsidiary to invest in the construction of the second phase of the Linying County Sewage Treatment Plant, with a total investment of about 90 million yuan, a daily sewage treatment scale of about 30,000 tons, and a sewage treatment fee of 1.48 yuan/ton; 2) The company established a joint venture with Henan Yulin International Flower and Beijing Weitgaard (share ratio: 51%, 26%, 23%, respectively) Zhongyuan Environmental Protection Zhengzhou Equipment Engineering Technology Co., Ltd. plans to carry out rural sewage treatment business; 3) The company signed the Xinyang Sanhe Sanhe Phase II project Comprehensive environmental management project PPP project cooperation framework agreement, with a total investment of about 2 billion yuan. In this regard, our comments are as follows: The main investment points: The sewage project is one more city, with a treatment scale of more than 2 million tons/day. In 2016, the company divested most of the heating business and injected sewage assets through major asset restructuring, making the company's main business into an urban sewage treatment business (in 2017H, accounting for more than 90% of revenue). Currently, there are 6 branches including Wangxinzhuang, Matougang, and Wulongkou, and 7 subsidiaries in Henan, including Pearl Water, Zheng Dong Water, and Dengfeng Water, are engaged in sewage treatment business. The sewage treatment scale exceeds 2 million tons/day The largest sewage in the province It is one of the treatment companies, and has continued to receive orders: since 2017, the company has successively acquired Yichuan (first phase upgrade of 20,000 tons/day), invested in Xinmi city sewage (total scale 110,000 tons/day, phase 1 40,000 tons/day) and rural sewage treatment projects, Chen Sanqiao Phase II (150,000 tons/day), Linying Phase II (30,000 tons/day), and Linying Phase II (30,000 tons/day). At the same time, according to major asset restructuring, the purification company promised to build the East New District Sewage Treatment Plant (1 million tons/day) and Shuangqiao Sewage Plant (1 million tons/day) 600,000 tons/day) injected into listed companies, at which time the company's sewage treatment capacity It will be greatly improved, providing a guarantee for growth in performance. Expanding rural sewage treatment business, continuously improving the industrial chain and building an ecological environment integrated service company is continuously expanding its industrial chain based on urban sewage treatment and centralized heating. Currently, it has been extended to fields such as reclaimed water reuse and biogas utilization. At the same time, sludge treatment technology has successfully developed sludge treatment reagents and drying equipment, and has now been tested by the State Grid Xingyang Coal and Electricity Integration Company. In August 2017, the company set up joint ventures with Zhengzhou Dingsheng and Zhengzhou Ziying respectively to expand construction waste and municipal sludge business. This time, the company set up a joint venture with Henan Yulin International Flowers and Beijing Weitgard to expand rural sewage treatment business. In addition, the company also has rich experience in the fields of river ecological restoration and characteristic towns. The company continues to improve the industrial chain, and integrated urban ecological environment service providers are gradually taking shape. A 2 billion yuan water environment management PPP project was signed, and the regional environmental protection platform has entered a new stage of development. The Xinyang Jihe Phase III water environment comprehensive management PPP project mainly includes 13-kilometer river management, beach cover land and green landscape construction along roads. The total investment of the project is expected to be 2 billion yuan. In April 2017, the company won the bid for a comprehensive gutter repair and ecological restoration project, and the company's comprehensive water environment management project continues to reap benefits. The company is the only state-owned platform for utilities and environmental ecology in Henan Province. In 2016, it resolved the issue of peer competition through asset restructuring. In March 2017, the utility group acquired shares in the Thermal Power and Purification Company and became the largest shareholder. The company's governance issues have been resolved, and the company's development is about to enter a new stage. At the same time, with the acceleration of PPP projects in Henan Province, as the only major state-owned environmental protection platform in the province, the company is expected to reap more PPP projects. At the same time, the controlling shareholder's utility group has assets such as waste power generation and tap water business, so the possibility of injecting them into listed companies in the future is not ruled out. PPP harvest+asset injection, the company's development prospects are worth looking forward to. Profit forecast and investment rating: Maintaining the company's “overweight” rating. We are optimistic about the company's future development prospects. The company's 2017-2019 EPS is expected to be 0.51, 0.61, and 0.70 yuan respectively, corresponding to the current stock price PE of 32, 27, and 24 times, maintaining the company's “increased holdings” rating. Risk warning: risk of falling sewage treatment costs, risk of PPP project expansion falling short of expectations, risk of significant increase in accounts receivable, risk of asset injection progress falling short of expectations, downside macroeconomic risk