Incident: On the evening of December 5, the company issued an announcement: 1) to acquire 55% of Henan Wujiancheng and rural shares for 55 million yuan, with engineering qualifications; 2) to increase the capital of Henan Shengrong New Energy Technology Company by 75 million yuan to obtain 75% of its shares and expand the photovoltaic business; 3) establish a joint venture with Guangzhou Shengqi Energy Equipment (investing 30 million yuan and holding 60% of the shares) to expand the sludge treatment business. Our comments on this are as follows: Key points of investment: Acquisition of Wujian Urban and Rural Development Engineering Business, continuous improvement of the industrial chain Wujian Urban and Rural Affairs was previously a subsidiary of Henan Wujian Group. Currently, it has qualifications such as Municipal Public Works Construction General Contracting Level 1, Construction Mechanical and Electrical Installation Engineering Professional Contracting Level 1, and Environmental Engineering Professional Contracting Level 1. The company now used 55 million yuan to acquire 55% of Wujian Urban and Rural's shares (purchased based on net assets) with the intention of obtaining engineering qualifications. The company continues to expand the industrial chain based on urban sewage treatment and centralized heating. It has now been extended to fields such as reclaimed water reuse, biogas utilization, construction waste, village sewage, watershed treatment, sludge treatment, etc. At the same time, the 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 Integrated Company. This time, it has set up a joint venture with Guangzhou Shengqi Energy Equipment to produce high-quality environmental protection equipment for sludge disposal, supporting the company's existing sludge conditioner technology to build from sludge conditioning, reduction and drying volume From resource utilization to the four in one The complete closed-loop heat pump technology for low temperature drying forms a systematic solution for sludge disposal and enhances the company's competitiveness and profitability. The company continues to improve the industrial chain, and a comprehensive service provider for urban ecology and environment is gradually taking shape. Henan Shengrong increased its capital and launched a new “water+photovoltaic” model. The company obtained 75% of Henan Shengrong's shares with a cash increase of 75 million yuan. Henan Shengrong mainly provides overall solutions for distributed photovoltaic power generation projects in sewage treatment plants. Currently, it is mainly responsible for the construction and operation of the 2.1 MWp split photovoltaic power generation project at the Second Sewage Treatment Plant in the Zhengzhou Comprehensive Insurance Zone (Airport Area), which was connected to the grid on September 30, 2017. The “water+photovoltaic” model has the advantages of small scale, fast construction, simple equipment, and small floor space. It not only reduces the operating costs of energy-intensive sewage treatment plants, but also conforms to the development direction of green and clean energy in the country. The project is expected to generate 2.4 million kilowatts of electricity per year. Based on industrial electricity consumption of 1 yuan/kilowatt, it will save the company 2.4 million yuan in operating costs every year, thereby increasing the company's profit level. It is expected that in the future it will be promoted in the company's current operation of more than a dozen sewage treatment plants. “Water+PV” has launched a new model for the company's development and broadened the company's business scope. Corporate governance resolution+industrial chain improvement+asset injection expectations. The company's development is about to accelerate. In 2016, the company resolved peer competition issues with shareholders through major asset restructuring. In March 2017, the company's former largest shareholder (sewage purification) and second largest shareholder (thermal power company) transferred the company's share agreement to the utility group to resolve corporate governance issues. In addition, we believe that the company is about to enter a period of rapid development. On the one hand, since 2017, the company has successively acquired Yichuan (20,000 tons/day), invested in urban sewage treatment projects in Xinmi City (total scale of 110,000 tons/day, first phase 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 successively won bids for the Chonggou Comprehensive Remediation and Ecological Remediation Project and the Xinyang Jihe River Phase III Comprehensive Water Environment Treatment PPP Project. Accelerate, as the only state-owned environmental protection company in the province Platform, the company is expected to reap more large-scale comprehensive environmental management projects. Furthermore, 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 Utilities Group has assets such as heat, water, and waste power generation, it is not ruled out that future injections will be made into listed companies. Order harvest+asset injection, the company's development prospects are worth looking forward to. Profit forecast and investment rating: Maintain the company's “gain” 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 share price PE of 29, 25, and 22 times, maintaining the company's “gain” 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 uncertain future company acquisitions and asset injections, risk of “water+photovoltaics” promotion falling short of expectations, macroeconomic downside risk