Event: The company released its 2020 quarterly report. The company achieved operating income of 184 million yuan in the first quarter, an increase of 21.53% over the previous year, and net profit of 2.35 million yuan, an increase of 150% over the previous year. It bucked the trend in the context of the epidemic, and its performance exceeded expectations. Earlier, on April 17, the company released its 2019 report. The company achieved operating income of 1,337 billion yuan in 2019, an increase of 29.28% over the previous year, and realized net profit of 111 million yuan, an increase of 19.94% over the previous year. Multiple businesses went hand in hand, and revenue increased significantly in 2019. The company mainly targets urban sewage treatment, industrial parks and industrial sewage treatment and sludge treatment in small and medium-sized cities. It has invested heavily in urban sewage treatment, and the corresponding revenue has increased rapidly. In 2019, the company's three businesses of operation services, comprehensive environmental management, and technical product sales went hand in hand. Revenue growth rates were 63.18%, 138.44%, and 49.93% respectively, setting the tone for significant revenue growth throughout the year. Operating services and environmental infrastructure construction contribute 72.46% of the company's revenue and are an important part of the company's profit streams. The company's on-going orders for non-operating projects exceeded 1.3 billion yuan, an increase of 92.62% over the previous year, laying a solid foundation for continued growth in 2020 performance. The operating business was stable, and Q1 bucked the trend during the pandemic. In the context of the 2020Q1 pandemic, the company's performance bucked the trend, and the company's net profit increased rapidly. One of the main reasons for this achievement is that under the pandemic, the company has ensured the stable operation of the sewage treatment plant while protecting the health of employees by strengthening communication with government departments. Operation operations have not been affected, and sales of the company's environmental technology products have increased dramatically. With the launch of new projects, the gross margin of the company's operating service business improved markedly. In 2019, the year-on-year increase of 8pct reached 41.78%. In the future, as ongoing projects continue to be put into operation, this business will provide the company with more stable profit sources. 2020Q1's environmental infrastructure construction and comprehensive environmental management services have been affected to a certain extent, but at present, the company's projects under construction have all resumed work and resumed production. The overall impact of the epidemic on the company is not significant, and the annual performance target is expected to be achieved. Orders are based on quality and quantity, and steady management helps improve cash flow. In 2019, the company began to focus on improving project quality, actively abandoning high-risk projects, and focusing on the steady operation of operating projects. In 2019, the company's net cash flow from operating activities was 266 million yuan, an increase of 229 million yuan over the previous year, which was greatly improved. In the context of the pandemic and macroeconomic deleveraging, good cash flow has become one of the necessary conditions to overcome difficult times. As the company continues to improve in terms of steady operation and improved cash flow conditions, the company is expected to take advantage of the industry's development process in the future and usher in a new round of rapid growth. Investment suggestions: Judging from the overall situation, the epidemic has had little effect on the company's performance throughout the year. The company will scientifically and rationally adjust the business plan, actively develop market orders, and gradually accelerate the progress of project construction. The company's EPS for 2020-2022 is expected to be 0.99, 1.29, and 1.67 yuan, respectively, and the corresponding price-earnings ratios are 14.2 times, 10.8 times, and 8.4 times, respectively. It is given an investment rating of increased holdings -A, with a target price of 16.84 yuan for 6 months. Risk warning: Project progress falls short of expectations, market competition intensifies, and policy changes fall short of expectations