Incident: On the evening of June 12, 2020, announcement: The actual controller, Li Wei, proposed to repurchase the company's shares, and also issued an announcement on the repurchase of shares: the repurchase amount of the company's shares is between 150 and 300 million yuan, and the repurchase price does not exceed 13.50 yuan/share. The repurchased shares are used for equity incentives or employee stock ownership plans after China Energy Energy has transferred the company's shares. The repurchase period is within 12 months after review and approval by the shareholders' meeting. In response to this, our comments are as follows: Investment points: The large-scale repurchase of 150 to 300 million yuan shows that the company is confident in future development. The company's current share repurchase is mainly due to the recent poor performance in the secondary market. The company's actual controller proposed to repurchase the company's shares based on current business conditions, financial conditions, and future development prospects. The board of supervisors of the board of directors has reviewed and approved it, yet to be reviewed and approved by the shareholders' meeting. The repurchase amount is 150-300 million yuan. The large-scale repurchase shows that the company has full confidence in future development, while at the same time helping to protect investors' interests and enhance investor confidence. The repurchased shares are used for equity incentives or employee stock ownership plans after China Energy Energy has transferred the company's shares. It binds the interests of the company's executives and core cadres after the company becomes a central enterprise, fully mobilizes their enthusiasm and is beneficial to the long-term development of the company. In-hand orders fully guarantee performance growth. It is expected that by the end of 2019, the company has in-hand engineering orders of 3,927 billion yuan, unfinished investment in the franchise category of 2,262 billion yuan, and in-hand currency capital of 1,057 billion yuan (as of 2020Q1). At the same time, Guozhen Group promised in the equity transfer agreement that the company's net profit in 2020 will not be less than 350 million yuan, in-hand orders+sufficient capital, and steady growth in performance throughout the year. Guozhen Group, the controlling shareholder of the company, plans to transfer 15% of its shares (100588051 shares) of the listed company to China Energy. Previously, China Energy Energy became the company's third largest shareholder through participation. After the equity transfer is completed, China Energy's shareholding ratio will rise from the current 8.69% to 23.69%, making it the company's largest shareholder. At the same time, Guozhen Group will entrust the voting rights of 41977700 shares (6.26%) to China Energy. The transfer price is 14.6636 yuan/share, which is a 32.10% premium over the closing price on the day of the announcement. China Energy Group has increased its holdings one after another. Coupled with the premium acquisition of a controlling interest, the company's recognition and confidence in future development has demonstrated the company's recognition and confidence in future development. China Energy Group is the only state-owned enterprise whose main business is energy saving and emission reduction and environmental protection. It is the largest technology-based service-oriented industrial group in the field of energy saving and environmental protection in China. It has more than 500 subsidiaries, including 5 listed companies, and its business covers all provinces and cities of the country and about 110 countries and regions abroad. At the same time, China Energy Conservation Group has been given the corporate responsibility of playing the main platform for pollution control in the protection of the Yangtze River by the state, and is expected to bring projects to the company during the Yangtze River protection. In addition, China Energy Conservation has water assets totaling 13 million tons/day from China Environmental Water (processing 11 million tons per day) and China Energy Saving Water (processing 2.2 million tons per day). The possibility of injecting high-quality water assets into listed companies or entrusting listed companies to operate water assets in the future is not ruled out. It is expected that China Energy will have a synergistic effect after entering the market. Profit forecast and investment rating: Maintaining the company's “overweight” rating. The impact of repurchases on the company's share capital is not considered yet. The company's EPS in 2020-2022 is expected to be 0.59, 0.71, and 0.80 yuan respectively, corresponding to the current stock price PE of 16, 13, and 12 times, respectively, maintaining the company's “increased holdings” rating. Risk warning: risk of new orders falling short of expectations, risk of slow progress of projects, risk of lower sewage treatment fees, risk of rising interest rates, risk of collaboration with China Energy Conservation Group falling short of expectations, risk of controlling interest transfer not being completed successfully, risk of share repurchases not being successfully implemented, risk of macroeconomic downturn.