Incidents: The company released its three-quarter report. Revenue for the first three quarters of 17 was 2,476 billion yuan, up 32.98% year on year; net profit was 248 million yuan, up 37.3% year on year; net profit after deducting 243 million yuan, up 43.29% year on year. Comment: The performance was in line with expectations, and the environmental inspection caused the growth rate to decline in the third quarter. The first three quarterly reports are forecast to increase by 30-60% year-on-year, and actual performance is at the bottom of the forecast. At the same time, the company predicts a 30%-60% increase in performance for the full year of 2017. In the third quarter of this year, the Central Environmental Protection Inspectorate was stationed in Zhejiang. Affected by strict environmental management requirements, downstream thermal users have accelerated the transformation of environmental protection facilities, and demand for heat has been reduced. The gross margin for the first three quarters fell 2.48% year on year to 19.54%, mainly due to the increase in raw material prices in the third quarter; the cost control capability was excellent; the three-fee ratio decreased by 1.4% to 6.51% year on year. Among them, the management fee rate was reduced by 0.65% year on year, and cost control was excellent in the process of rapid growth; and the financial expense ratio decreased by 0.59% year on year, and the efficiency of capital use was high in line with revenue growth. The composite gross margin fell slightly by 0.4% to 11.79% due to a decline in the share of three fees. We believe that the decline in performance growth will not continue: 1) Fuyang base fully implements the new “Coal and Heat Price Linkage Mechanism” and raises heating prices. The price correction space is 40-50 yuan/ton, which will increase the efficiency by nearly 300 million yuan; and there is plenty of room for increase in the utilization rate of the corresponding base industrial park; 2) the production capacity of the company's new construction and mergers and acquisitions projects is gradually being released; 3) the affected enterprises in the park meet environmental requirements and gradually resume production. Over 900 million yuan will definitely increase, adding 550t/h of heating and 21MW of power generation capacity, increasing revenue by nearly 500 million yuan/year. The capital raised was invested in 1) the acquisition of Xingang Thermal Power (acquisition remaining 30%, 300 million yuan); 2) the Xingang Thermal Power Transformation and Expansion Project (300 million yuan, total investment amount of 390 million yuan), adding 1×B6MW power generation capacity and 2×220t/h (one use, one reserve) high temperature and ultra-high pressure circulating fluidized bed boiler, which has received an EIA, increased revenue of 215 million yuan based on 7000 hours of annual utilization; 3) The cogeneration project in the northern district of Liyang City (130 million yuan, total investment amount of 500 million yuan), added 2×B15W of power generation Machine capacity +3 x 110 t/h high temperature The high-pressure circulating fluidized bed boiler has received an EIA, adding 260 million yuan in revenue. 4) Flue gas treatment technology transformation project (110 million yuan); 5) combustion system technology transformation project (0.8 billion yuan), 1 #、3 #锅炉运行时间将从 6500 hours/year extended to 7,000 hours/year, increased revenue by 18 million yuan and cost savings of 11.72 million. The change of head of the company injected fresh vitality, and the shareholding increase plan for executives, shareholders, and employee shareholding increased the company's stability. Zhang Jie took over as chairman of the company in 2016, injecting fresh vitality into the company's management. At the beginning of September, the company's chairman and director, Mr. Zhang Zhongmei, director and general manager, and Mr. Wu Bin, director, increased their holdings of the company's shares by 2.6 million shares at an average price of 11.54 yuan/share to a total of 30 million yuan; Sun Qingyan, the actual shareholder of the company, and several shareholders each increased their shares, for a total amount of more than 80 million yuan, and employees plan to raise more than 50 million yuan in shares. Actively implement the cogeneration model through mergers and acquisitions. The company has continued to make mergers and acquisitions around the “cogeneration model”, adjusted its business structure, increased the share of cogeneration and environmental protection business, reduced the share of coal and cold-rolled formwork businesses, and enabled the company's overall gross profit margin to increase significantly in the past three years. By strengthening the management of the projects after the acquisition, the profitability of the acquired subsidiaries was greatly increased. Among them, Xingang Thermal Power achieved a significant increase in net profit of nearly 200%, while Donggang Thermal Power and Qingyuan Ecology both turned losses into profits after the acquisition. The Chang'an Nantong project was acquired in 2017 and is being actively built. Based on the company's strong profitability, it is expected that the Nantong project will greatly help increase performance. Investment suggestions: The company's existing projects have rapidly expanded production capacity, increased utilization rates, rising heating prices in Fuyang, excellent cost control capabilities, and outstanding environmental protection results in the layout, jointly promoting a significant increase in performance in 2017. It is estimated that in 17/18/19, the company's net profit will be 440 million yuan, 570 million yuan, and 690 million yuan respectively, and EPS will be 0.56 yuan, 0.72 yuan, and 0.86 yuan respectively. The corresponding PE will be 24, 19, and 16 times. Referring to comparable company valuations, the “buy” rating will be maintained. Risk warning: cost accounting seasonal imbalance risk, environmental policy risk, project progress risk.