The company won the bid for the sponge city construction PPP project in Suining City, and the sponge city business went one more time. The company received a winning bid notice from the Hedong New Area Construction Bureau of Suining City on September 13, confirming that the company was the winning consortium for the first phase of sponge city construction renovation and allied river system management PPP projects in Hedong New Area of Suining City. The total investment of this project reached 1 billion yuan. In addition to the Huakong SEG, the consortium that won the bid also included the North China Design Institute, China Construction Third Bureau, Beijing Tianhua Greening, and Beijing Xiangkun Water. The construction period is from 2016 to 2017, which is beneficial to the company's operating performance. The winning bid for this sponge city construction project is the second time since the company won the bid for the sponge city construction project in Qian'an City. It further proves that the company's model of starting with planning and driving construction projects in the sponge city is feasible. It has an important supporting effect on the company's future development, and at the same time benefits the company's performance in the next two years. Suining is the first batch of pilot cities for sponge cities. The project is feasible. This project is the first phase of the sponge city construction project in Suining. The total investment is 1 billion yuan, the return on investment is 6.95%, and the cost, maintenance and management costs, and design costs are explained separately. Suining has entered the pilot list of the first batch of sponge cities and will enjoy a financial subsidy of 400 million yuan per year, for a total of 1.2 billion yuan in 2015-2017, which can support the progress of this project to a certain extent. The total investment of the announced project was reduced by 198 million yuan compared to the estimate in the revised non-public offering; the project company was invested by the winning consortium and government funders at 90:10, and the company's share of investment in the winning bid consortium was not announced. Currently, the company successfully implemented the first phase of the Suining project, which is conducive to the company's competition in Suining's subsequent projects. The total investment anticipated by Suining in the first batch of pilot projects is 5.83 billion yuan, so there is potential for growth. With the gradual resolution of difficult points, the pace of sponge city construction is progressing at an accelerated pace. Now, as the difficulties in sponge city construction are gradually resolved, the pace of sponge city construction is progressing at an accelerated pace. By the end of the second quarter of 2016, the number of sponge cities in the Ministry of Finance's national PPP integrated information platform project bank reached 35, an increase of 23 over the end of the first quarter; the investment amount reached 68 billion yuan, an increase of 48.5% over the end of the first quarter. It is the fastest growing sub-industry in terms of environmental PPP projects. With the introduction of the second batch of sponge city pilot lists and the deepening of sponge city construction, the market will gradually expand in volume. The company actively participated in the planning and preparation of the second batch of sponge city pilot projects, expanded potential partners, and the Human Settlements Research Institute helped complete or participated in the planning of various cities such as Zhuhai, and was shortlisted for the second batch of sponge city pilot projects, expanding the scope of high-quality partners; in addition to Pingxiang, which focused on expansion in the first batch, etc., the company gained a certain advantage in developing the sponge city construction market. Huakong SEG is one more city in the direction of sponge city, maintaining that the “buy” rating company won the bid for the sponge city construction project in Suining, and continues to prove the viability of the “planning+construction” path. In addition, the company cooperates in many cities in terms of planning, including pilot and non-pilot cities, so it is optimistic that the company will continue to reap benefits in the competition for sponge city construction projects. We gave Huakong SEG a “buy” rating. The 2016-2018 EPS is expected to be 0.10/0.35/0.42 yuan. Risk warning: Policy progress falls short of expectations; industry competition intensifies.