Event Overview On July 23, 2020, the company announced the results of the public issuance. This time, no more than 49,871,023 shares of RMB common stock (A shares) were publicly issued. The issue price was 11.63 yuan/share, and the total capital raised was not more than 579,999,997.49 yuan (including issuance fees). The funds raised were used for the construction of the Beibu Gulf Resource Regeneration and Environmental Protection Service Center (Phase I) and the Hunan Bosch Environmental Protection Industrial Park (Phase II) base construction and additional working capital. Analysis and judgment: The fixed increase is far from simply improving assets and liabilities. The introduction of war investment will help the company start a second time. This time, the fixed increase in offline institutional investors has effectively subscribed to a total of 6 accounts, including Guangzhou Environmental Investment Group Co., Ltd., Guangxi Environmental Protection Group, and Chongqing Environmental Protection Industry Equity Investment Fund Management Co., Ltd., as can be seen very clearly that these 3 institutions are not simple financial investors, and further cooperation with the company can be expected later. As early as May 2019, the company issued an announcement stating that it plans to introduce a state-owned strategic investor, Guangxi Environmental Protection Industry Investment Group Co., Ltd., and signed a “Strategic Cooperation Framework Agreement” with it. The implementation of this fixed increase is the official beginning of the strategic cooperation between Guangxi Environmental Protection Industry Investment Group and Bosch. As currently the only listed environmental protection company in the autonomous region, the cooperation will help the company obtain more business resources and financial support in the fields of sewage treatment, soil restoration, solid waste disposal, and garbage disposal within the autonomous region, enhancing the company's industry position and overall competitiveness in the Guangxi environmental circle. As a wholly owned state-owned enterprise directly under the Guangzhou Municipal Government, Guangzhou Environmental Protection Investment Group Co., Ltd. covers a large solid waste sector. The waste incineration business is based in Guangzhou, with an overall treatment capacity of 26,000 tons/day. Previously, Bosch focused on the field of water protection. It is believed that the cooperation between the two companies can create more sparks in the water+solid waste field. On the Chongqing side, on March 17 this year, the company and Chongqing Solid Waste Company signed a “Strategic Cooperation Framework Agreement”. The two sides plan to establish long-term cooperative relationships in the fields of soil restoration and solid waste disposal to effectively promote the rapid development of the environmental protection industry in Chongqing and Gui. The fixed increase raised a total of 580 million yuan in capital, but the significance of this fixed increase is not only in improving the balance structure and improving the company's resilience to risks. Judging from the introduction of the three war investment institutions, the two sides place more importance on future development and cooperation. We believe that the implementation of this fixed increase can provide sufficient momentum for the company's future development, help the company successfully start a second time, and truly grow into a domestic environmental protection enterprise with technology, endurance, and distance travel. The fund-raising projects are of high quality, focusing on the fields of solid waste and equipment manufacturing. The capital raised by the company this time is mainly used for the construction of the Beibu Gulf Resource Regeneration and Environmental Protection Service Center (Phase I) and the Hunan Bosch Environmental Protection Industrial Park (Phase II) base construction and supplementary working capital. Beibu Bay Resources Regeneration and Environmental Protection Service Center (Phase I) is positioned as a regional, comprehensive industrial waste treatment and disposal project, with a planned total investment of 337 million yuan, a construction period of 2 years, and a post-completion hazardous waste treatment scale of 64,000 tons/year, including incineration treatment of 16,500 tons/year, solidification and landfill treatment of 30,000 tons/year, physical and chemical treatment of 10,000 tons/year, and comprehensive utilization of etching liquid of 0.75 million tons/year. After the project is completed and put into operation, it will rapidly improve the company's solid waste business level and enhance performance. Hunan Bosch is the company's main base for expanding market business in central China and the Yangtze River Basin outside the Guangxi region. The construction of the Hunan Bosco Environmental Protection Industrial Park project includes an environmentally friendly high-precision equipment manufacturing workshop, an integrated sewage treatment equipment manufacturing workshop, etc. After the completion of the project, Hunan Bosch will form a total annual output of 400 high-speed and high-efficiency centrifugal blowers, high-speed centrifugal compressors, turbine vacuum pumps and mixers, and the capacity to produce 240 units of integrated sewage treatment equipment per year, while further enhancing the service capabilities of the entire environmental protection industry chain. The scope of services will cover technology incubation, technology development, technology development, etc. Engineering design, environmental impact assessment, environmental monitoring, environmental testing, etc. At that time, the Hunan subsidiary will become the company's main rear base for expanding markets in central China and Guangdong. The business structure has been optimized and operations have improved markedly, and cash flow is expected to continue to improve. Beginning in 2019, the company actively sought change and stopped actively obtaining individual PPP projects. Ongoing PPP projects survived the fittest, and gradually withdrew from some PPP projects that were marginal and could not be implemented or put into operation for a long time due to government reasons, further improving the overall quality of the company's PPP business. At the same time, most of the company's stock PPP projects have moved into the operation period, forming a stable operating cash inflow. In 2019, the company achieved operating income of 162 million yuan, an increase of 173.43% over the previous year. The company has set up a special repayment team for special projects. The repayment amount is linked to the performance of each department to strengthen repayment management. As the company's business transformation is gradually completed, the company's cash is expected to continue to flow in, improving the continuous outflow of operating cash flow over the past few years, and adding fixed increases can ease the pressure on the company's capital in many ways. Investment advice companies are now reducing large capital expenses and improving cash flow through deleveraging, improving the business structure, increasing the share of operating income, and abandoning some PPP projects that do not increase revenue. At the same time, the completion of this fixed increase is far more than relieving the company's financial pressure. More long-term, it is introducing strategic partners to the company, expanding future business scope and fields, and providing opportunities to start a second business. We maintain our previous forecast. The company's operating income for 2020-2022 is estimated to be 4,096 billion yuan, 5.016 billion yuan, and 6.305 billion yuan, respectively, up 26.3%, 22.5%, and 25.7% year on year; net profit is 358 million yuan, 441 million yuan and 531 million yuan respectively, up 26.7%, 23.1%, and 20.5% year on year; corresponding EPS is 1.01/1.24/1.49 yuan. The valuation was 17 times that of 2020, corresponding to the target price of 17.17 yuan, maintaining the “buy” rating. Risk warning 1) debt financing falls short of expectations; 2) project repayment falls short of expectations; 3) order acquisition falls short of expectations.