The core view is that 1Q20 EPS is 0.06 yuan, which is lower than expected. The epidemic has affected hazardous waste disposal demand, and the decline in gross margin in the resource business has dragged down performance; production capacity reserves are abundant, and the company's future performance flexibility is guaranteed; the epidemic has accelerated the industry standardization process, and industry concentration is expected to increase. Maintain the EPS forecast of 0.60/ 0.71/0.81 yuan from 2020 to 2022, and maintain the “hold” rating. 1Q20 EPS 0.06 yuan, lower than expected. The company's 1Q20 operating income was 658 million yuan, a year-on-year decrease of 18.42%; net profit of 56 million yuan, a year-on-year decrease of 48.57%; and converted basic earnings per share of 0.06 yuan, lower than expected. The impact of the pandemic was the main reason for the decline in performance. The main reasons for the decline in the company's performance include: due to the impact of the COVID-19 pandemic, upstream and downstream enterprises stopped work and cut production, hazardous waste disposal demand and demand for resource products both declined, resulting in a decline in hazardous waste disposal business revenue; declining sales prices of resource products and rising raw material prices, which squeezed the gross margin of the resource business, and the company's overall gross margin fell 4.8 percentage points to 31.27% year on year. As enterprises fully resume work and resume production, it is expected that the company's Q2 performance will improve. Production capacity reserves are abundant, and future performance can be expected. The company added 20,000 tons/year of incineration qualification in 1Q20. As of 1Q20, the company's total hazardous waste management qualification exceeded 1.92 million tons/year. The total design capacity of the completed hazardous waste business license and the projects under construction exceeded 200,000 tons/year, and the total design capacity of the proposed projects exceeded 410,000 tons/year. Abundant project reserves provide a guarantee for the flexible release of future company performance. Industry standardization is speeding up, and the market share of leading enterprises is expected to increase. Since the outbreak of COVID-19, the medical waste and hazardous waste disposal industry has received increasing attention. The introduction of documents such as the “Comprehensive Waste Management Work Plan for Medical Institutions” and the “National Three-Year Action Plan for the Special Remediation of Work Safety” will accelerate the standardization process of the hazardous waste disposal industry, the backward production capacity will gradually be cleared, and the concentration of the industry will continue to increase. The company has obvious advantages in terms of business qualifications, location layout, technical reserves, etc., and is expected to occupy a larger market share. Risk factors: As a result of macroeconomic fluctuations, changes in the company's industrial waste business volume and gross margin exceeded expectations, and project commissioning progress was slower than expected, etc. Investment advice: Considering the gradual elimination of the impact of the epidemic and the continued high level of industry prosperity, we maintain the EPS forecast of 0.60/0.71/0.81 yuan from 2020 to 2022. The current stock price corresponding P/E is 16/14/12 times. Maintain a “hold” rating.