Complete the layout of the entire industrial water industry chain. After entering a period of rapid growth, the company went public in 2015, it has successively completed the acquisition of 100% shares of Tongsheng Environment, 100% of Ande Technology's shares, and 55% of Zhongxu Environment's shares, and completed the layout of the entire industrial water industry chain. Net profit in 2017 increased 150% year over year, in line with our expectations. The company released a forecast for the first quarter of '18. Net profit for 18Q1 is expected to increase by 440%-470% year on year, officially entering a stage of rapid growth. Prices of the company's original main business, water treatment agent products, rose markedly in '17, and the Q1 boom continued in '18. We expect the company's mergers and acquisitions to fulfill its performance promises in all 18 years. The company's future layout of the entire industry chain+regional synergy will gradually show, guaranteeing the company's ability to obtain orders. Net profit surged 150% in 2017, and operating cash flow remained steady. The company disclosed its 17-year annual report, achieving full-year revenue of 840 million yuan (+76%), net profit of 113 million yuan (+150%), and basic earnings per share of 0.52 yuan (+126%). The overall gross margin reached 33.25%, an increase of 2.28 pct over the previous year. The sales expense ratio was 5.8%, down 1.2pct year on year; the management expense ratio was 8.2%, up 0.3 pct year on year; and the financial expense ratio was 1.2%, up 1.4 pct year on year, mainly due to an increase in short-term loans. The net inflow of operating cash flow for the year was 26.39 million yuan (-3.6%), which remained steady. The net outflow of investment cash flow was 224 million yuan, mainly due to the acquisition of 100% of Ande Technology and 55% of Zhongxu Environment's shares. The layout of the company's entire industrial water industry chain was initially completed, and the overall cash flow is expected to improve markedly in 2018. All of the mergers and acquisitions exceeded their performance commitments. Profits in the water treatment agent business reached the best level of merger and acquisition targets since listing, and Ande Technology achieved net profit of 606.6/23.97 million yuan in 2017, respectively, which was higher than their respective performance commitments of 5600/23 million yuan. Benefiting from supply-side reforms+environmental inspection, supply in the water treatment agent industry has been reduced and supply is in short supply, and prices have risen significantly. The gross margin of the water treatment agent business is as high as 33.26%, an increase of 10pct over the previous year, the best level since listing. In 2017, the company's original water treatment agent production capacity was hardly affected by environmental inspections, and the fund-raising project reached production, expanding production capacity from 60,000 tons to 90,000 tons. We expect Qingshuiyuan's original water treatment agent business to achieve a total net profit of about 43 million yuan throughout '17, reaching the best level since listing. In 18Q1, the growth rate is expected to be between 440%-470%. Rapid growth was further confirmed by the company's disclosure of the results forecast for the first quarter of 2018. In 18Q1, net profit is expected to reach 48.77 million yuan to 51.48 million yuan (+440% to 470%). Mainly because: 1) Water treatment agent products were affected by market factors, and profitability increased significantly compared to the same period last year; 2) Zhongxu Environmental was included in the scope of the consolidated report in the first quarter, which brought growth to the company's performance. We expect that excluding the effects of merger factors, the 18Q1 company's original water treatment agent business will achieve a net profit of about 30 million yuan. We expect this part of the business to achieve a net profit growth rate of more than 130% year-on-year for the full year of '18. Raise the profit forecast and maintain the “buy” rating. Since the prosperity of the company's water treatment agent business exceeded our original expectations, we raised the company's 2018-19 earnings per share forecast to 1.11/1.34 yuan (before adjustment: 0.94/1.18 yuan) and introduced the 2020 earnings per share forecast of 1.61 yuan. Referring to the average P/E 21x of comparable companies in 2018, giving the company 20-21x P/E in 2018, corresponding to the target price of 22.20-23.31 yuan/share (before adjustment: 19.74-21.62 yuan) /share). Maintain the buy rating. Future catalysts include: The boom in water treatment agents is expected to exceed expectations. Risk warning: Performance promises for mergers and acquisitions have not been fulfilled; excessive expansion of investment projects worsens cash flow.