Performance fell short of expectations, and continued to be optimistic about future development potential. In 2019, the company achieved revenue/net profit from maternal profit/net profit of 34.6/42/360 million yuan, +5.3%/+3.9%/+11.8% over the same period last year, and the performance fell short of expectations. The company's production capacity has continued to increase in recent years, and the company's total long-term production capacity is expected to exceed 2.5 million tons/year. Affected by the COVID-19 pandemic, we have appropriately lowered our profit forecast. We expect net profit from the mother in 2020-21 to be 51/640 million (previous value: 6.4/740 million), which is expected to reach 730 million yuan in 2022, corresponding to EPS of 0.58/0.73/0.83 yuan, giving the company a target of P/E19-21x for 2020, corresponding to the target price of 11.07-12.24 yuan, maintaining the “buy” rating. Harmless monetization is in line with expectations. According to the annual report, in 2019, the company achieved revenue/net profit/non-return net profit of 34.6/4.2/3.6 billion yuan, +5.3%/+3.9%/+11.8% over the same period last year. The performance fell short of expectations, mainly due to the decline in both industrial waste resource utilization business revenue and gross margin. Considering the global spread of the COVID-19 pandemic, macroeconomic pressure on the global economy in 2020 is expected to be high, and resource utilization may continue to be under pressure in the short term. Furthermore, the harmless business during the year is in line with overall expectations. The company's cash flow improved during the reporting period. Net cash flow from operating activities increased by 37.6% year on year to $1.23 billion, mainly due to the increase in the company's industrial waste treatment business and the return of loans from Huiyuan Small Loan Company. In addition, 4Q20's main profit increased by 1.6% year on year, management expenses and financial expenses were significantly reduced, and the cost rate decreased by 5.4pct to 21.3% during the 4Q20 period. Production capacity continues to increase, and the leading position is stable. According to the announcement, at the end of 2019, the company had a production capacity of about 1.9 million tons/year, of which incineration, landfilling/resourcing/physicalization was 30/18/82/600,000 tons/year, and the capacity utilization rate was over 44%. In recent years, the company's production capacity has accelerated. In 2019, the company added about 330,000 tons/year of hazardous waste disposal production capacity. Currently, the total production capacity of the projects that have been completed and are applying for a hazardous waste business license and the projects under construction exceeds 200,000 tons/year. Additionally, the production capacity of the proposed projects is about 410,000 tons/year. The company's total long-term production capacity is expected to exceed 2.5 million tons/year. Currently affected by the epidemic and other factors, China's hazardous waste disposal industry is booming. Stricter environmental supervision is expected to further eliminate non-compliant treatment capacity, which is beneficial to the company's long-term performance. Increase the layout of the environmental protection industry and introduce investment. Synergies can be expected. Since 2019, the company has set up a joint venture with Huitou in Huizhou in January, mainly in solid waste disposal business, holding 60% of shares. In March, it increased its holdings in Foshan Fulong Environmental, with a shareholding ratio of 51%. This move will further increase the company's deep layout in the environmental protection industry in Guangdong Province. Furthermore, in August 2019, the company and Huihong Group invested a total of 200 million yuan to establish a joint venture in Nanjing, mainly in solid waste and hazardous waste disposal business. This cooperation is expected to achieve complementary advantages between the two sides and rapidly advance the company's environmental protection industry layout in East China. Synergies can be expected. Lowering the profit forecast and maintaining the “buy” rating has been affected by the COVID-19 pandemic. We have appropriately lowered our profit forecast. The net profit for 2020-21 is expected to be 51/640 million (previous value: 6.4/740 million), which is expected to reach 730 million yuan in 2022, corresponding to an EPS of 0.58/0.73/0.83 yuan. The average P/E value of comparable companies in 2020 is 17x. Considering that the company is a leader in the hazardous waste disposal industry, it should enjoy an appropriate premium. The company is given a target P/E19-21x for 2020, corresponding to the target price of 11.07-12.24 yuan, maintaining a “buy” rating. Risk warning: The commissioning progress of the project fell short of expectations, and the cash flow situation worsened due to large investments.