Event: On the evening of October 27, the company released its 2017 three-quarter report: From January to September, the company achieved revenue of 711 million yuan, a year-on-year increase of 4.06%, net profit attributable to shareholders of listed companies of 269 million yuan, a year-on-year increase of 8.06%, and realized net profit attributable to shareholders of listed companies of 195 million yuan, an increase of 18.21% over the previous year. Our comments on this are as follows: Investment points: Performance was in line with expectations, and the third quarter performance declined due to the influence of Wang Xinzhuang Sewage Treatment Plant. From January to September 2017, the company achieved 7.11 million yuan in revenue 100 million yuan, up 4.06% year on year, realized net profit attributable to shareholders of listed companies was 269 million yuan, up 8.06% year on year. The performance was in line with expectations. Among them, net profit attributable to shareholders of listed companies in the third quarter was 93.4633 million yuan, a year-on-year decrease of 23.43%, mainly because the Zhengzhou municipal government plans to buy back Wangxinzhuang Sewage Treatment Plant in order to meet environmental protection requirements, and the company is gradually reducing its sewage treatment volume. Although the final shutdown of Wangxinzhuang sewage treatment plant will reduce the company's performance, the government's repurchase price will be factored into current profit and loss. Also, Wang Xinzhuang's sewage will only be diverted to other sewage treatment plants. In the end, it is likely that the company will treat it, and the long-term impact will be limited. The company's comprehensive gross profit margin was 43.99%, a year-on-year decrease of 1.06 pct, management expenses of 40.2881 million yuan, a year-on-year decrease of 22.88%, and financial expenses of 156.646 million yuan, a year-on-year decrease of 62.85%. Due to the receipt of 328 million yuan in arrears from the Finance Bureau, the company's net operating cash flow was 199 million yuan, a significant increase over last year (-6.094 million yuan). Continuously improve the industrial chain to create a comprehensive ecological environment service provider. In 2016, through major asset restructuring, the company divested most of the heating business and injected sewage assets, making the company's main business into an urban sewage treatment business (accounting for more than 90% of revenue in 2017), and the scale of sewage treatment exceeded 2 million tons/day. The company continues to expand 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. In September, a joint venture was formed 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. Corporate governance resolution+industrial chain improvement+asset injection expectations. The company's development is about to accelerate. In 2016, the company resolved the issue of competition with shareholders through major asset restructuring. In March 2017, the company's former largest shareholder (sewage purification) and second-largest shareholder (Thermal Power Corporation) transferred the company's share agreements to the utility group to resolve corporate governance issues. In addition, the company is about to enter a period of rapid development. On the one hand, since 2017, the company has successively acquired Yichuan (phase I upgrade and transformation of 20,000 tons/day), invested in Xinmi city sewage (total scale 110,000 tons/day, phase I 40,000 tons/day) and rural sewage treatment projects, Chen Sanqiao Phase II (150,000 tons/day), Linying Phase II (30,000 tons/day), etc., on the other hand, the company has successively won bids for integrated drainage and ecological restoration projects, Xinyang Jihe Phase III water environment comprehensive treatment PPP projects, along with the Henan Provincial Environmental Protection PPP The acceleration of project progress, as the only state-owned major environmental protection company in the province Platform, the company is expected to reap more large-scale comprehensive environmental management projects. Also, considering that the Zhengdong New Area Sewage Treatment Plant (1 million tons/day) and Shuangqiao Sewage Plant (600,000 tons/day) will be injected into listed companies in the future, while the controlling shareholder's utility group has assets such as heat, water, and waste-to-energy, etc., the possibility of future injection into listed companies is not ruled out. Order 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 35, 30, and 26 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