Key elements of the report: The company is located in core regions of Guangdong, Hong Kong, Macao, Yangtze River Delta, etc., with strong R&D capabilities, covering 44 categories of qualifications, and is the leading enterprise with the most complete hazardous waste qualifications in the industry. Since 2016, it has experienced many share transfers. Guangdong Guangsheng and Jiangsu Huihong have become the company's first and second largest shareholders. The total state-owned holding ratio is as high as 30.37%, and shareholder resources are abundant. The company's revenue in 2019 was 3.459 billion yuan, up 5.31% year on year, and achieved net profit of 424 million yuan to mother, an increase of 3.93% year on year. Key investment points: Policies have strengthened supervision, and the prosperity of the hazardous waste industry has increased: We estimate that the annual output of industrial hazardous waste has exceeded 100 million tons in 2020, but due to factors such as low capacity utilization and misallocation of disposal types of certified enterprises, the scale of certified treatment reached only 34%, and CR8 reached only 28%. With the implementation of policies and the strengthening of operational supervision, the future industry will gradually be standardized, leading enterprises will usher in a new round of mergers, and their market share will further increase. The company has sufficient production capacity reserves and complete operating qualifications: by the end of '19, the company had a hazardous waste treatment capacity of 1.9 million tons/year, and production capacity under construction and proposed to exceed 610,000 tons/year. The layout covered the eastern coast and 10 major industrial provinces including Sichuan and Xinjiang, and rapidly expanded through epitaxial mergers and acquisitions, reaching 70 subsidiaries. The company's current hazardous waste qualifications cover 44 categories, which is the most complete in the industry. R&D investment increased rapidly, increasing capacity utilization: R&D expenses were 127 million in 2019, an increase of 39.12% over the previous year. 68 new authorized patents were added during the same period. Currently, there are 450 patents. Capacity utilization efficiency is leading the industry. The company uses advanced technology to implement process improvements to existing projects. Many R&D achievements have been industrialized, and the conversion of inefficient qualifications has been accelerated. The capacity utilization efficiency is as high as 44%, and the industry average for the same period was only 26.41%. Profit forecast and investment advice: The company's revenue for 20-22 is estimated to be 38.06/44.09/5,018 billion yuan, respectively; net profit to mother is 517/6.15/703 million yuan, up 21.9%/19.0%/14.3% year on year; EPS is 0.59/0.70/0.80 yuan/share, respectively. Considering the company's leading position in the hazardous waste treatment industry, the target price for the next 6 months is 11.8 yuan, corresponding to 20 times PE in 20 years, maintaining the company's “gain” rating. Risk factors: Production capacity release falls short of expectations: price fluctuations for downstream products using resources; environmental protection regulations fall short of expectations; competition exacerbates the decline in gross profit; and there may be errors in estimates.