A leading sewage treatment enterprise in Henan and Hebei, where endogenics and epitaxial co-drive the company's growth, it holds shares. It is a leading comprehensive environmental service provider in China, integrating municipal administration and industrial sewage treatment. The company is deeply involved in small and medium-sized cities, and is committed to becoming a leading enterprise in environmental management in small and medium-sized cities in the future. China Holding Co., Ltd. uses the “medium assets+heavy service” business model to rapidly expand the market, continuously improve customer stickiness, and continue to create new value from the perspective of customer needs, thus achieving endogenous growth. In 2018, the company acquired 60% of Nanzi Environmental Protection's shares, sewage treatment technology was strengthened again, and Nanzi Environmental Protection exceeded its performance promise in '18. The company's performance is expected to grow steadily in 19-21, with overall revenue of 1,28/15.4/1.74 billion yuan, and net profit of 1.38/1.70/202 million yuan respectively. Referring to the P/E 17x of comparable companies in '19, the company is given a target P/E of 19-21x in '19, with a corresponding target price of 18.24-20.16 yuan. The prospects for sewage treatment in small and medium-sized cities are bright. The market space of single cities is expected to exceed 100 million yuan. Compared with large cities, small and medium-sized cities have fewer departments and lower communication costs. There are more opportunities for the company's overall layout in small and medium-sized cities, and its business can expand in many fields such as sewage treatment to industrial pollution control. The company expanded its business around regional centers to achieve endogenous growth. At the same time, as public awareness of environmental protection increases and the scope of environmental management continues to expand, there will be more opportunities in the sewage treatment market in small and medium-sized cities. Currently, the company has classified North China and Central China as key markets, adheres to the concept of “regional management”, and takes into account the national layout, thus achieving healthy development. The company is expected to rely on close distribution to maintain quality service and enhance customer stickiness. The environment-related market space for a single small to medium city is expected to exceed 100 million yuan. Taking Langfang as an example, the company won another 130 million bid in '19 on top of the 18-year order. Reduced maintenance participated in market competition, and many advantages helped the company become a leading company founder Xu Guodong, led the former construction engineer Jinyuan team to start a second business, build in small and medium-sized cities, seize favorable policy opportunities, and become a pioneer in sewage treatment in small and medium-sized cities. The company team has rich experience in first-tier urban sewage treatment and has entered the small to medium city market when the sewage treatment market in large cities tends to be saturated. The company expanded its technological advantages through external mergers and acquisitions. In April '18, it acquired 60% of Jiangsu Nanzi Environmental Protection's shares with 252 million yuan in cash. In '17, Nanzi Environmental achieved a net profit of 30.87 million yuan. At the time of the company's acquisition, PE 14x was static. Southern Environmental Protection promised a net profit of 33 million to 38 million yuan in 2018-19, not less than 71 million yuan in total. In 2018, Southern Environmental Protection actually achieved 41.97 million yuan, exceeding performance commitments. The company's sewage treatment technology has been strengthened again. For the first time, coverage was given an “increase in holdings” rating. The target price is 18.24-20.16 yuan, and the company's performance in 19-21 is expected to grow steadily. Overall revenue is 12.8/15.4/1.74 billion yuan, respectively, and net profit is 1.38/1.70/202 million yuan, respectively. The corresponding P/E for 19-21 is 18/14/12x, respectively. Referring to Comparable Company's 19-year P/E 17x, consider that the company is a sewage treatment leader in small and medium-sized cities, and that the relatively concentrated project area can help increase customer stickiness. Due to the company's strong potential for endogenous growth (estimated compound profit growth rate of 29% in 19-21 vs. 24% compound growth rate expected by comparable companies unanimously), we believe that the company should enjoy an appropriate premium. The company was given a target P/E of 19-21x in '19, with a corresponding target price of 18.24-20.16 yuan. For the first time, coverage was given an “increase in holdings” rating. Risk warning: new orders fall short of expectations, repayment falls short of expectations, shareholders' holdings are drastically reduced, etc.