The results of the strategic transformation are beginning to show. Maintaining the “increase in holdings” rating. According to the company announcement, the 1Q20 company achieved operating income of 184 million yuan, +21.5% year-on-year; net profit of 22.95 million yuan, +149.5%; net profit after deduction of 22.94 million yuan, +148.8% year-on-year. The company's 1Q20 performance growth was mainly due to the fact that sewage operation projects were not affected by the epidemic, compounded by a sharp increase in sales volume of high-margin environmental technology products. The company's concept of “healthy management, innovative development” is gradually being implemented. Refined management is compounded by improvements in revenue structure, boosting the company's performance. We raised our early profit forecast. We expect the company's EPS in 2020-22 to be 0.96/1.09/1.24 yuan, respectively, giving the company a target P/E of 18-19x in 2020, corresponding to the target price of 17.28-18.24 yuan, maintaining the “increased holdings” rating. 1Q20 had impressive performance. The gross margin increased sharply year-on-year. The 1Q20 company achieved operating income of 184 million yuan, +21.5%, net profit of 2.35 million yuan, +149.5% year-on-year. The strong increase in performance was mainly driven by the following factors: 1) The company's sewage operations were less affected during the epidemic, with a sewage treatment capacity of 55.08 million tons, -2.3% year on year, but the overall average price of sewage treatment increased significantly. Among them, the unit price of sewage treatment in Henan/Hebei/other regions increased 15.4%/19.5%/23.2% year on year to 23.35% /1.96/3.5 yuan/ton; 2) Despite the impact of the epidemic, the company's construction progress was delayed, but sales of technical products increased year-on-year, driving revenue-side growth; 3) Due to the company's strengthened screening of projects and management of projects under construction, and the increase in revenue share of high-margin technology products, the 1Q20 company's gross margin increased 10.3 pct to 45.7% year on year. There was a slight decline in new orders. I am optimistic that the annual performance of 1Q20 was affected by the pandemic, and the bidding process for many projects moved backwards. The amount of new contracts signed by the company in the first quarter decreased compared to the same period last year. The total amount of newly signed contracts was 108 million yuan, a decrease of 181 million yuan from the same period last year, a decrease of 62.62%. The new contracts were mainly in the comprehensive environmental management service business. The company stated in its quarterly report that all projects currently under construction have resumed work and resumed production. Judging from the overall situation, we judge that the impact of the epidemic on the company's performance throughout the year is limited. It is expected that subsequent delayed orders will be released at an accelerated pace. At the same time, the company is gradually speeding up project construction progress, and the performance target for the whole year remains unchanged. The target price is 17.28-18.24 yuan. The target price is 17.28-18.24 yuan. Considering that the results of the company's “steady management, healthy development” strategy transformation are beginning to show, combined with high performance growth in 1Q20, we have raised our early profit forecast. It is estimated that the company's net profit for 2020-21 will be 1.39/158 million yuan (previous value: 120/140 million yuan), respectively, introducing a 2022 profit forecast of 180 million yuan, corresponding to 20-22 EPS of 0.96/1.09/1.24 yuan, respectively. Referring to the comparable company Wind, the average P/E value in 2020 is 16x. We are optimistic about the long-term growth brought to the company by the strategic transformation, give the company an appropriate premium, give the company a target P/E of 18-19x in 2020, corresponding to the target price of 17.28-18.24 yuan (previous value: 13.68-14.38 yuan), and maintain the “increase in holdings” rating. Risk warning: New orders fall short of expectations, water environment management falls short of expectations, etc.