The performance was in line with expectations. The overall industrial water industry chain layout paid off. On the evening of August 28, the company released its 2018 interim report. 18H1 achieved revenue/net profit of 766/ 109 million yuan, +149%/284% year-on-year, and +297% year-on-year net profit after deducting non-return to mother. The performance was in line with our expectations. Among them, 18Q2 achieved net profit of 69 million yuan, +233% year-on-year, and continued high growth in performance. Among them, Zhongxu Environmental entered the scope of merger in '18, and 18H1 Zhongxu Environmental (holding 55% of shares) contributed about RMB 22.23 million to net profit to mother. The company's endogenous growth mainly comes from water treatment agents maintaining a high level of prosperity. 18H1's original water treatment agent business contributed about 60 million yuan in profit, and the annual profit contribution is expected to exceed 100 million yuan. We expect the company's net profit for 2018-20 to be 2.4/29/350 million yuan respectively, corresponding to EPS of 1.11/1.34/1.61 yuan for 18-20 years, maintain a target price of 22.20-23.31 yuan/share, and maintain “purchase”. 18H1's main water treatment agent business has maintained a high level of prosperity. The sword indicates that due to the 17-year environmental inspection and the 18-year environmental inspection “looking back”, industrial companies' willingness to control pollution has greatly increased, and the prices of the company's original main water treatment agent products have risen sharply since '17, and continue to maintain a high level of prosperity. We expect the company's water treatment agent business to contribute more than 100 million yuan in net profit throughout the year. In May, the company announced a plan to issue convertible bonds to raise capital to expand production capacity. If the production expansion plan is successfully implemented, the company's water treatment agent production capacity will increase from the current 90,000 tons to 270,000 tons, making it the largest water treatment agent manufacturer in China. After full commissioning and stable operation, we expect the production expansion portion to contribute 150 million in net profit every year (130% of net profit in 2017), and the company's performance is expected to increase. The synergy effect of the entire industry chain layout continues, and profits from the middle and downstream business are expected to be released at an accelerated pace in the second half of the year. We estimate that the profit ratio of the downstream business (engineering-operation-operation and maintenance) of the 18H1 Qingshuiyuan Industry will be less than 50%. It is expected that the second half of the year will accelerate with the gradual settlement of project payments and the release of profits from government order settlement. The subsidiaries are likely to achieve their performance promises. The company's entire industry chain has strong synergy effects. The main business continues to contribute stable operating cash flow to support the expansion of the middle and downstream business. The subsidiary's regional collaboration is obvious: the company announced on April 14 that Qingshuiyuan and Zhongxu Environmental jointly won the bid for the Jiyuan local waste incineration project, with a project amount of 337 million yuan. The company's own hematopoietic capacity and growth potential are strong, and the entire industry chain layout helps the company continue to grow rapidly. Maintain profit forecasts, maintain the layout of the entire industrial water industry chain (upstream pharmaceuticals+midstream engineering+downstream operation/operation and maintenance) of the “buy” rating company by the end of '17. 18H1 performance continues to grow at a high rate, and the synergy effects of the entire industry chain are gradually being reflected. The company plans to raise convertible bonds to increase its main business. After the project is put into production and stable operation, it is expected to contribute an additional 150 million yuan in net profit every year, and there is plenty of room for future growth. Regardless of the contribution of the fund-raising project, we expect that the main business water treatment agents will contribute more than 100 million in profit in 2018, and that the three mergers and acquisitions can meet their performance promises. The net profit for 2018-20 is estimated to be 2.4/2.9/350 million yuan, corresponding to EPS of 1.11/1.34/1.61 yuan, maintaining a target price of 22.20-23.31 yuan/share, maintaining a “buy” rating. Risk warning: Performance promises for mergers and acquisitions have not been fulfilled; cash flow has deteriorated due to rapid expansion of investment projects; progress of production expansion plans falls short of expectations.