Excellent operation to improve quality and efficiency, a number of indicators have been improved. As the company enters the threshold of hundreds of billions of assets enterprises, the company ushered in a new stage of development. The company's 14th five-year Plan shows that the company will continue to improve the development efficiency of the company in an all-round way through excellent operation. In 2020, by deepening the reform of the management system, the company continued to improve its operational efficiency. The recovery rate of comprehensive water charges for the whole year increased by 2 percentage points to 99%, and the difference between production and marketing of water supply business decreased by 0.57 percentage points to 14.28%. The water and electricity charges per ton of stock projects are reduced by 12% of the same caliber, and the total pharmacy costs of stock projects are reduced by 10% of the same caliber. At the same time, the company's operating capacity has been gradually upgraded, with a net operating cash flow of 4.454 billion yuan for the whole year, an increase of 33.62% over the same period last year, ranking first in the water industry for five consecutive years.

In the current project sufficient to enter the capacity release period, business development is both important and important. At present, the utilization rate of tap water supply capacity of the company is 59.14%, and that of sewage treatment capacity is 82.55%. In terms of comprehensive management of the water environment, Guyuan, Sanya, Shunyi, Linqu, Neijiang, Huai'an and other projects will also enter the operation stage one after another. The solid waste plate has 71 reserve projects by the end of 2020, with a total designed annual garbage disposal capacity of 13.82 million tons and an annual disassembly of about 3.2 million pieces of electrical and electronic equipment. With the continuous increase in the utilization rate of the company's existing capacity, the company is expected to enter the performance release period. At the same time, the company continues to optimize its asset structure and give priority to business expansion. The Zhongshanshui EPC+O project, which won the bid in the 13th five-year Plan, is a typical representative of the company's light asset model. In 2020, the company signed 5.433 billion yuan for light asset projects such as EPC+O and commissioned operation, accounting for about 25% of the total amount of newly signed projects in the whole year.

Urban water resources to tap the potential of the stock to expand the increment, to help the company's rapid revenue growth. In 2020, the company has put into operation to control the scale of water supply and sewage, respectively, 5.86 million tons / day, 7.79 million tons / day, of which the new water supply and sewage production are 64 million tons / day, 127 million tons / day. The company's annual revenue of water treatment business was 2.176 billion yuan, an increase of 7.07% over the same period last year, and that of sewage treatment business was 3.868 billion yuan, an increase of 44.67% over the same period last year. The reduction of industrial water consumption of the company affected by the epidemic led to a change in the water supply structure, but still achieved tap water sales of 1.114 billion tons, an increase of 11.79% over the same period last year. At the same time, the company raised the price of sewage treatment by raising the bid for the stock projects in Yiyang and Changde, which helped the company's revenue to grow steadily. The total revenue for the whole year was 19.225 billion yuan, an increase of 28.96% over the same period last year.

Profit forecast: from 2021 to 2023, the company's operating income is estimated to be 215.81 billion yuan, net profit is 19.23 million, EPS is 0.31, and PE is 11.76, 9.97, 8.69 times of the original net profit of 2.603 billion, 0.31, 0.35 and 8.69 times, respectively, of the company's estimated operating income of 215.81 million yuan, 2.681 billion yuan, 2.668 billion yuan, 0.31 billion yuan and 8.69 times, respectively. Cover for the first time, giving a "buy" rating.

Risk hint: the competition in the industry intensifies and the business development falls short of expectations.