Investment points: For small and medium-sized cities, the Operation Engineering Collaborative Development Company is a comprehensive water service provider focusing on investment and operation, system integration, trusteeship management, and technical services for water, sewage and associated sludge treatment facilities. Operation and engineering services are developed collaboratively for small and medium-sized cities, industrial parks and industrial customers. The sewage treatment market still has plenty of room for development. The investment in urban sewage treatment during the “13th Five-Year Plan” period was 193.8 billion yuan, an increase of 64.6% compared to the “12th Five-Year Plan”. The compound annual growth rate of new treatment capacity in cities and counties is expected to be 6.7% and 36.7%, respectively, in the next three years. The “13th Five-Year Plan” rural sewage construction market is expected to release 130 billion yuan, and there is still plenty of room for development in sewage treatment. Deeply cultivating core regions and expanding emerging regions, project orders continue to grow. The core management team members of the company's steady operation have been working in the ecological environment protection industry for an average of more than 26 years. The company currently has 105 patented technologies and 14 software copyrights. The acquisition of 60% of Nanzi Environmental Protection's shares in 2018 further enhanced the market competitiveness of the company's industrial parks and industrial sewage treatment business. At the same time, since listing, while deeply cultivating advantageous regions such as Hebei, Henan, and Zhejiang, it has strengthened offsite expansion in regions such as Shanghai, Anhui, Shanxi, and Shaanxi. It won the bid for the Xinjiang project in August 19, with a total investment of 682 million yuan, marking the company's breakthrough in high-quality water assets business in the northwest region. From January to September 2019, the total number of engineering service contracts signed by the company was 963 million yuan, an increase of 376 million yuan over the same period last year, an increase of 63.89%. Up to now, more than 30 sewage treatment plants have been invested and operated under contract, with a design and operation capacity of more than 1 million cubic meters per day. The average daily design and treatment scale of projects under construction/preparation for operation exceeds 200,000 tons, and the total investment amount exceeds 1.3 billion yuan, exceeding the size of assets currently in operation (about 800 million yuan), and there is broad scope for future operation and development. The “Recommended” rating is expected to achieve net profit of 102 million yuan, 133 million yuan, and 159 million yuan respectively in 19-21. The corresponding EPS is 0.71 yuan, 0.92 yuan and 1.10 million yuan respectively, and the corresponding current stock price PE is 20, 15 and 13 times lower than the valuation of comparable companies. It is covered for the first time, giving it a “recommended” rating. Risks indicate a decline in gross margin, market progress falls short of expectations, and project progress falls short of expectations. Policy risks