The target of scarce industrial water treatment, the steady growth of endogenous epitaxial extension, Shanghai Xiba is based on chemical water treatment services, and the steady growth of endogenous epitaxial is the target of scarce industrial water services. 1) Steady growth in operations and increased elasticity of EPC. The company's water treatment system operation management+chemical sales and service business grew steadily (80% of revenue in 2017), EPC project expansion accelerated, and Hegang successfully won the bid for 370 million EPC orders in 2018, contributing to performance elasticity; 2) the 2020E industrial water operation market exceeded 70 billion, downstream industry: environmental relocation drives high steel growth, and steady growth in the automotive/civil sector; 3) Outreach mergers and acquisitions (Academy of Environmental Sciences/hazardous waste) are progressing in an orderly manner. The estimated EPS for 18-20 is 1.07/1.40/1.86 yuan. Referring to the 19 average P/E 23x of comparable companies, the company is given 30-34 xP/E in '19, with a target price of 42.0-47.6 yuan/share, covering the “buy” rating for the first time. Operations grew steadily, and EPC increased the flexible operation sector (water treatment system operation management+chemical sales and service) grew steadily (17, 5% revenue growth, 80% of revenue/86% of gross profit). Downstream customers mainly came from the petrochemical/automotive/steel/paper/civil sector. Customers are mainly large state-owned enterprises that have served for many years, and customer and project resources are high and stable. Downstream industry: Environmental relocation drives high growth in industrial water treatment in the steel sector, and steady growth in the automobile/civil sector. EPC project development accelerated in 2018. big Single (the company undertakes about 270 million dollars, accounting for 17 percent of revenue), and aims to obtain operating orders for this project in the future. The company operates asset-light and has sufficient capital (150 million cash on hand in 18Q3, 170 million dollars in idle capital to purchase wealth management products), and the balance ratio in 18Q3 is only 13.8% (room for future external storage and leverage). The industrial water operation market space is broad, and the company has the ability to break through. The cumulative market space for industrial wastewater treatment in 2018-2020 may reach 318.5 billion, of which the operating market space is expected to rise to 71.8 billion in 2020 (GEP Research forecast); the proportion of third party operations is currently only 20%, industrial wastewater sub-industries have non-standard demand and high technical barriers. Currently, participants have strengths in technology, market segmentation and business models. Seba is prominent in the steel industry. Steel profit recovery (impact of removal of production capacity) and environmental relocation have contributed profit growth points; The automotive sector has maintained steady growth. SAIC Motor Group, the largest customer, may expand new customers to contribute incremental profits in the future; the petrochemical sector has an early layout and high-quality customer resources; the papermaking sector is under pressure, and the civilian sector has significant advantages and steady growth. We believe that Shanghai Xiba, which has core competitiveness in market/technology/capital, etc., is expected to stand out. Extensive mergers and acquisitions and internal incentives go hand in hand to create a leading chemical water treatment operator to acquire shares in Blue Sky Environmental Technology. The intention is to join hands with the Tianjin Academy of Environmental Sciences to further strengthen scientific research capabilities and expand project entry; the acquisition of Henan Shunkai carefully tests the field of water hazardous waste disposal, and actively expands the industrial chain while deepening its main business. The company's equity incentive plan in May 2018 better links the interests of executives and key employees with the company. In 2017, the company's per capita output value reached 380,000 yuan, which is expected to continue to grow. Growth is outstanding, with a “buy” rating for the first time. The target price is 42.0-47.6 yuan, benefiting from the environmental relocation of steel, driving high growth in industrial water treatment in the steel sector, and addition/renewal of orders in the automotive sector. The company's performance is expected to maintain high growth, with net profit CAGR as high as 34% in 18-20. The estimated EPS is 1.07/1.40/1.86 yuan in 18-20. The current stock price corresponds to 36x/27x/21x P/E in 18-20. Referring to the 19 average P/E23x of comparable companies, the company has a high share of operating business/abundant cash flow/outstanding growth, giving it a “buy” rating of 30-34xp/E in '19, with a target price of 42.0-47.6 yuan/share. Risk warning: Project promotion and operation, steel sector performance growth, and merger and acquisition projects have failed to meet expectations.