Incident: The company released its 2019 annual report. In 2019, it achieved operating income of 3.459 billion yuan, an increase of 5.31% over the previous year; realized net profit of 424 million yuan, an increase of 3.93% over the previous year; and realized net profit of 361 million yuan without return to mother, an increase of 11.75% over the previous year. The harmless business continues to grow at a high rate, and the resource-oriented business continues to be under pressure. The company's industrial waste treatment and disposal business maintained a good development trend, with revenue of +29.55% to 1,667 billion yuan in 2019; according to our estimates, the unit price of harmless disposal further increased to 3000+ yuan/ton, and the mismatch between the supply and demand structure of hazardous waste disposal capacity still exists, which further drove the gross margin of harmless disposal to increase by 2.97 pcts to 50.4%; the company's resource business was affected by factors such as increased competition, falling product demand and falling metal prices. At $1,075 million, gross margin also fell 2.18 pcts to 23.2%. The company's comprehensive gross margin increased by 0.80 pct to 36.08% year on year, the cost ratio increased slightly by 0.54 pcts to 21.81% during the period (mainly due to the increase in sales expenses and R&D expenses), and the net margin decreased by 0.94 pct to 13.49% year on year. The pace of production capacity release is accelerating. If released successfully, it will guarantee future performance growth. The company accelerated the pace of hazardous waste production capacity release in 2019, increasing the total production capacity by about 330,000 tons/year (9.5/241,000 tons/year for resourcing/detoxification, respectively), driving the company's total hazardous waste management qualification to more than 1.9 million tons/year (82/1.08 million tons/year for resourcing/detoxification respectively), and the overall qualification utilization rate exceeded 44%. The total production capacity of the company currently applying for hazardous waste business licenses and projects under construction exceeds 200,000 tons/year (according to our statistics, resource/harmless production capacity is 2/220,000 tons/year, respectively), and reserve production capacity exceeds 400,000 tons/year (according to our statistics, resource/harmless production capacity is 15/290,000 tons/year, respectively). This production capacity is expected to be released at an accelerated pace in 20-22 to ensure the continued growth of the company's performance. Maintain the “gain” rating for A/H shares. The company's resource utilization business is under pressure, and revenue from other businesses such as trade has declined after focusing on the main hazardous waste business. We lowered the company's profit forecast for 20-21 and added a 22-year profit forecast. The company's net profit for 20-22 is 4.73/5.46/ 634 million yuan (the original value for 20-21 was 5.50/665 million yuan), and the corresponding EPS for 20-22 is 0.54/0.62/0.72 yuan. The current A share price is 19 times PE in 2020, and the current H share price is 10 times PE in 2020. times. As the absolute leader in the hazardous waste industry, the company will still benefit from the industry's boom period, and the gradual release of production capacity will also be steadily realized, maintaining Dongjiang Environmental Protection (A) “gain” rating and maintaining Dongjiang Environmental Protection (H) “gain” rating. Risk warning: Project progress falls short of expectations, there is a shortage of talent to operate the company after expansion, and collaborative disposal methods for cement kilns are being squeezed in the future.