Summary of content:

Grasp the regional dangerous and scarce resources, waste acid treatment and waste incineration to add power. In terms of hazardous waste, Jilin solid waste, a wholly-owned subsidiary of the company, controls the largest and only hazardous waste landfill (under construction) in the three northeastern provinces, and its resources are relatively scarce. In addition, the company will increase capital in Jinghua hazardous waste project, which will become the largest hazardous waste disposal project in Heilongjiang Province after completion, and will provide the company with a net profit of more than 70 million yuan per year after reaching production. The dangerous waste license is scarce and the treatment cost is high, and it is expected that the company's income from hazardous waste treatment is expected to double in 2018. In terms of waste acid treatment, the company has entered the field of waste acid treatment by increasing capital in Shanghai Hengjing, and it is expected that the first three years after the first phase of the Bazhou waste acid project, it can provide the company with a net profit of more than 13 million every year, becoming a new profit growth point for the company. In terms of waste incineration, the company has signed a letter of intent for domestic waste power generation projects in Thailand, and will jointly build, operate and maintain five waste incineration plants with local companies in Thailand. All the projects are expected to contribute more than 150 million yuan in net profit, accounting for 80% of the company's equity, with a net profit of 120 million yuan, which is expected to be put into operation in 2019. In terms of sludge and oil-based drilling cuttings, the company acquired a 51% stake in Taiyuan Oil in 2016. It has become the only out-of-system company that has successfully entered the petrochemical system. In the future, it is expected to help the company to lay out emerging markets in advance.

Water environment governance adds new performance growth points for the company. In 2016, the company acquired the qualification of water environment treatment through acquisition beyond science and technology, and obtained technologies such as biological enzyme treatment, efficient flocculation, rapid silt removal and drying of sediment, which can carry out mud-water co-treatment of river rivers. we have successfully opened up new fields such as water environment treatment and ecological restoration. 2017 is the assessment year for the regulation of the Heidi River, while river treatment orders for water treatment companies began to break out this year, and the company is expected to benefit from the strengthening trend of the industry in 2018. At present, demonstration projects are being carried out in many places, which will have a positive impact on the performance of the company.

New materials business is an important supporting force for the company's performance. The company increased its capital in Huizhou Icos in 2016 and became the largest shareholder by 45%. This new materials business has become a major factor in the company's performance growth in the first three quarters of 2017. At present, Huizhou Icos Phase I project has just been completed, with a raw material handling capacity of 300000 tons, which is the largest C5 separation project in the country and the largest comprehensive utilization project in Asia. After the completion of the second phase, the deep processing capacity of C5/C9 will be formed, and the products will have a wide range of uses. The first phase of the project is expected to be put into production in early 2018, with an annual net profit of more than 200 million yuan, making it an important supporting force for the company's performance.

Risk hint. Business expansion is not as expected, project M & A risk, emerging market policy risk, market competition risk, domestic and foreign secondary market systemic risk.