Event: The company announced the 2017 annual performance increase announcement: The net profit attributable to shareholders of listed companies is expected to be 30 million yuan to 34 million yuan in 2017, an increase of 0.84%-14.29% over the same period last year. In response, our comments are as follows: Investment points: Net profit increased by 0.84%-14.29%, in line with market expectations. Net profit attributable to shareholders of listed companies is expected to be 30 million yuan to 40 million yuan in 2017, an increase of 0.84%-14.29% over the same period last year, in line with market expectations. The company's revenue and net profit both increased compared to last year, mainly because: 1) Sewage treatment volume and heating area increased steadily year over year. In 2016, the company purchased sewage assets such as Wulongkou Sewage Treatment Plant Phase I and Phase II, Matougang Sewage Treatment Plant Phase I and Phase II by issuing shares to the purification company, solving the problem of competition in the industry with major shareholders and achieving unified operation of the sewage treatment business in Zhengzhou. With the advancement of urbanization and the improvement of people's living standards, the sewage treatment volume continues to rise. Currently, the company has 14 sewage treatment plants, with a sewage treatment capacity close to day With 2 million tons, it is in the leading position in the region of Henan Province. 2) The company recovered the sewage treatment fee arrears from the Zhengzhou Municipal Finance Bureau, resulting in a year-on-year decline in total loans and a corresponding reduction in financial expenses. Continuously improving the industrial chain to build a comprehensive environmental service provider, orders have entered the harvest period. The company has continuously expanded the industrial chain based on urban sewage treatment and centralized heating. It has now been extended to reclaimed water reuse, biogas utilization, construction waste, village sewage, watershed treatment, sludge treatment, photovoltaics and other fields. In December 2017, it acquired 55% of shares in Wujian City and Rural Areas in Henan Province and obtained engineering qualifications. At the same time, since 2017, the company has successively won bids for urban sewage and rural sewage treatment projects in Yichuan and Xinmi Three Bridges Phase II, Linying The total investment amount for projects such as Phase II, Comprehensive Water Treatment and Ecological Restoration Project, Xinyang Jihe Phase III Water Environment Comprehensive Treatment PPP Project, Zhongmu County Rural Sewage Project, Yiyang County Sewage Treatment and Drainage Network (Phase I) Project, and Minquan County Water Project Integrated Construction and Renovation Project, with a total investment of more than 3.5 billion yuan. With the acceleration of environmental PPP projects in Henan Province, as the only major state-owned environmental protection platform in the province, the company is expected to harvest more projects with the advantages of the industrial chain and government resources, and the company is about to enter the order harvest period. 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 28, 24, and 21 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 uncertain future company acquisitions and asset injections, risk of project progress falling short of expectations, and downside macroeconomic risk.