Start with technology and introduce state-owned assets and war investment to enhance comprehensive strength. Since its establishment in 1999, the company has formed a full industry chain layout in various fields such as water pollution control, soil restoration, water supply engineering, solid waste disposal, chlorine dioxide preparation and clean production, environmental protection equipment manufacturing, environmental protection project operation, and environmental protection professional technical services. In 2019, the company signed a “Strategic Cooperation Framework Agreement” with Guangxi Environmental Protection Industry Investment Group. It is expected to rely on the background of the Guangxi Environmental Protection Industry Platform, give full play to Bosch's technical advantages, and carry out in-depth cooperation in sewage treatment, soil restoration, and solid waste disposal. Supply and demand on the environmental investment and financing side are improving. Increased demand side of environmental protection: Due to the impact of the September 2019 National Standing Committee resolution issuing special bonds in 2020 prohibiting investment in real estate projects such as land storage, etc., the focus of investment in 2020 changed markedly. The volume of special bonds issued in the environmental protection direction in Q1 2020 was 97.7 billion yuan, a sharp increase of 430.98% over the previous year, and investment demand on the demand side of the environmental protection industry rose markedly. Improved implementation on the supply side of capital: Since the sharp decline in 2017, the corporate bonds of environmentally listed companies have rebounded year by year. The total amount of bonds issued in 2019 rose to 10.9 billion yuan, an increase of 102.23% over the previous year; market interest rates also fell from 6.63% in 2017 to 4.92% in 2019. PPP has maintained steady development, and environmental protection projects are superior to the industry as a whole: Despite the decline in the scale of environmental PPP projects affected by the industry as a whole, the volume and investment growth rate of net new projects in January 2020 both rebounded, and the number and amount of environmental protection projects in the overall PPP field increased. The company's business structure has been actively adjusted, and its performance has fluctuated due to the business model. Affected by PPP and other investment business adjustments, the overall growth rate of the industry, and the epidemic, the company's net profit in 2019 increased 21.4% year on year to 285 million yuan, and 2020Q1 net profit fell 14.68% year on year. Judging from the business structure, the main revenue comes from integrated operation services in the fields of water treatment, soil restoration and environment. In 2019, water treatment and soil restoration accounted for 77.99% and 10.95% of revenue, respectively. According to business operation attributes, operating revenue in 2019 was 160 million yuan, a sharp increase of 173% over the previous year, and the share of high-quality cash flow business increased significantly. The incremental project structure continues to be optimized, and the share of stock project operations has increased. In 2019, the company added 3,975 billion dollars in contracts, of which PPP contracts fell 77% year on year, engineering (EP, EPC) orders increased by 3,025 billion dollars, accounting for 76.10%, and new investment orders accounted for only 7.55%. At the same time, in terms of business types, short-term engineering businesses such as soil restoration and disinfection equipment were the main subjects of new orders. However, the investment projects in hand projects have all entered the implementation stage, and the share of operating business that has cash flow while confirming revenue has increased. By the end of 2019, the amount of orders during the operating period had increased sharply by 78.74% to 70 million yuan. Also, in terms of cash flow, net operating cash flow for the full year of 2019 was 105 million yuan, a marginal improvement from -43 million yuan in the same period last year. The operation business is fully deployed, and the pandemic has brought about elimination and catalytic wastewater treatment. Based on Guangxi's resource advantages, the company continues to make efforts in the fields of sanitation and hazardous waste operations. Currently, it has a production capacity of 199,000 tons of hazardous waste under construction and over 579 million sanitation projects. Furthermore, the COVID-19 pandemic has accelerated the release of space in fields such as medical sewage and disinfection equipment. The 337 hospitals above level II in Guangxi Province alone are expected to bring 1.05 billion yuan of wastewater upgrade and 200 million yuan of disinfection equipment requirements. However, the company has mature technology and has mature cases in the fields of chlorine disinfectant preparation equipment and medical wastewater treatment, so the massive demand released in the short term is expected to further expand the company's size. Profit forecasts and investment advice. Considering the acceleration of the company's business restructuring, we expect the company's net profit to be 3.6 (previous value was 6.5), 4.5 billion yuan, and 590 million yuan respectively in 2020-2022, an increase of 28%, 24%, and 31% over the previous year, corresponding to PE of 11, 9, and 7 times. Considering the increase in valuation brought about by the improvement in the company's business structure, the valuation level of the benchmark industry combined with the DCF valuation, we gave a target valuation of 14 times for 2020, corresponding to the target price of 14.4 yuan/share, maintaining a “push” rating. Risk warning: The pace of business adjustment falls short of expectations; the improvement in financing conditions falls short of expectations; and market competition intensifies.