Incident: Recently, the company released the “2016 Semi-Annual Report”. In the first half of 2016, the company achieved revenue of 918 million yuan, a year-on-year increase of 18.78%; achieved net profit of 165 million yuan, an increase of 345.46% over the previous year; achieved net profit of 44.8705 million yuan without deduction to mother, an increase of 22.86% over the previous year. Key investment points: Integrated energy service performance was steady, water and electricity sales increased sharply in the first half of 2016, and the electricity business achieved revenue of 697 million yuan, a year-on-year increase of 28.52%; the natural gas business achieved revenue of 153 million yuan, a year-on-year decrease of 5.71%, achieving a gross profit margin of 21.46% and a year-on-year increase of 4.2%; the tap water business achieved revenue of 52.48%, an increase of 4.94% year-on-year. Leshan Chuanqian Electric Power's consolidated report for May 2015 achieved operating income of 203.2676 million yuan and net profit of 9.6485 million yuan. In terms of operating data, water and electricity sales are growing steadily. The company's power supply business is within Leshan City and Meishan City, and the gas and water supply business is within Leshan City. The company has about 386,000 electricity users, 158,000 tap water users, and 271,900 gas users. In the first half of 2016, the company completed electricity generation capacity of 277 million kilowatt-hours, a year-on-year increase of 30.35%; completed sales of 1,315 million kilowatt-hours of electricity, an increase of 8.09%; completed sales of 63.4 million cubic meters of gas, an increase of 10.84%; completed sales of 13.3317 million cubic meters of water, an increase of 4.57% over the previous year. According to the consolidated report of Leshan Chuanqian Electric Power in May 2015, the power generation capacity from January to April 2016 was 3.68 million kilowatt-hours, accounting for 11.43% of the power generation in the first half of the year, and the electricity sales volume was 214.74 million kilowatt-hours, accounting for 16.33% of the electricity sales in the first half of the year. The company's own and grid-connected power plants have an installed capacity of 5427.35 million kilowatts, of which the grid-connected hydropower plants have an installed capacity of 452.35 million kilowatts, accounting for 82.96% of the total installed capacity, which has a strong competitive advantage. This year, the incoming water from Sichuan is relatively good, and the amount of electricity generated has increased. In addition, the company strives to expand the gas supply and water supply markets in surrounding towns, actively support and accelerate the construction of government projects and shed renovation projects, increase market share, and increase coverage and market share. Leshan Water Supply Co., Ltd., a holding subsidiary of the company, invested RMB 120 million and Leshan Water Investment to jointly invest in the establishment of Leshan No. 5 Water Plant Co., Ltd. to accelerate the expansion of the tap water business. The large amount of debt is expected to be reversed, and Mojiang Coal and Electricity's losses were drastically reduced. According to the relevant judgment and the bankruptcy ruling of Ledian Tianwei, the company transferred back the estimated debt of 37.07 million yuan; the company's lawsuit against Baobian Electric won the final judgment to confirm the interest of the claim; the company's lawsuit against Baobian Electric finally won the lawsuit to confirm its claim of 73.8 million yuan. Mojiang Coal and Power Company, a holding subsidiary, saw a sharp year-on-year loss reduction of -5.733,000 yuan due to the completion of personnel resettlement and disposal of some assets, and a year-on-year reduction of losses of about 20 million yuan. At present, Mojiang Coal and Electricity has completed personnel placement work, and the disposal of surplus assets is being actively promoted. Electricity price adjustments have had a negative impact on the company's performance. The company's power grid suspended the sales side Fengkufeng Valley electricity prices (users that produce electricity using ionic membrane chlor-alkali production), the electricity price of the Internet side thermal power Fengkufeng Valley and hydroelectric peak valley electricity prices since the electricity volume was reviewed in March 2016. In addition, Qianchuan Electric Power Company, a wholly-owned company under the company, received the Qianwei County Development and Reform Bureau's “Approval on Adjusting Electricity Prices in Fengkufeng Valley in Our County”. Chuanqian Electric Power Company suspended electricity prices on the sales side after reviewing electricity volume in April 2016; suspended electricity prices for thermal power in Fengkufeng Valley on the Internet side and electricity prices for hydropower in Peak Valley; and fully implemented electricity prices on the sales side. It is estimated that this electricity price adjustment will reduce the company's electricity operating revenue (including Chuanqian Electric Power Company) by about 20 million yuan in 2016, which will adversely affect the company's performance. The participating subsidiary of Sichuan Shengtian, SUNPOWER, Apple and others, will cooperate with Apple to build 20 MW high-efficiency photovoltaic power plants located in Hongyuan County and Zoige County in Sichuan. When the two projects are completed, it will be jointly owned by Sichuan Shengtian and Apple, with Sichuan Shengtian accounting for 56% and Apple accounting for 44%. Sichuan Shengtian New Energy achieved a net profit of 5.917,400 yuan, and the company confirmed investment income of 1.278,200 yuan according to the Equity Law. As future power plants continue to be developed, it is expected that performance will continue to increase. Maintain a “Recommended” rating. Without considering factors such as increased distribution and dilution, we expect that in 2016-2018, EPS will be 0.41 yuan, 0.27 yuan, and 0.32 yuan, respectively, corresponding to 20.72 times, 31.44 times, and 26.45 times PE, respectively. Considering that the incoming water has been good this year, the company's future performance will not be dragged down by Ledian Tianwei and Mojiang Coal and Electricity. There is plenty of room for spontaneous hydropower to replace outsourced electricity, and the performance of participating in photovoltaic power plants is highly flexible, maintaining the “recommended” rating. Risk warning: Risk of electricity sales prices falling short of expectations; power generation falling short of expectations; participating companies' power plant progress falling short of expectations; natural gas and tap water business falling short of expectations.