Company Background: Shouchuang Environmental (formerly New Green Energy) mainly engages in waste treatment and waste-to-energy business in China. The company's business covers technology development, design, system integration, project investment, consulting, operation and maintenance of waste treatment facilities (particularly waste-to-energy projects in China). The company is also engaged in the procurement and trading of equipment, and provides engineering services and municipal solid waste recycling services. Capital Co., Ltd. (600008.CH) obtained a controlling interest in the company in 2010. After Capital became the majority shareholder, Capital Environment (1) injected capital through allotments; (2) acquired profitable assets; and (3) sold loss-making assets. Capital Co., Ltd. currently owns 51.51% of the company's shares. The major acquisition deal will close in the near future. The deal to acquire 51% interest in Waste Management NZ (WM), a subsidiary of its parent company, was approved by shareholders on June 24. WM is a leading garbage collection and disposal company based in New Zealand with a market share of over 30%. The acquisition price is HK$1,816.6 million, equivalent to 10.9 times the price-earnings ratio in 2015. The company will pay by issuing 4,541,547,877 shares at an issue price of HK$0.40 per share. After the acquisition is completed, Shouchuang Environmental's shareholding ratio will increase to 66.91%. In 2015, WM's revenue and net profit were HK$2,417.7 million and HK$336.6 million, respectively. The garbage collection and landfill business is the main source of revenue, accounting for 62.4% and 21.1% of total revenue, respectively. WM is expected to achieve better growth in 2016, mainly due to increased market share and productivity. The capital injection will help Shouchuang Environmental's operating performance significantly improve in 2016 and beyond, as WM's 2016 full-year results will be incorporated into Shouchuang Environmental's results. Shouchuang Environmental will be able to use WM's expertise to undertake waste treatment business, including hazardous goods and rural waste treatment business, as well as local and municipal garbage collection projects. New Zealand's leading company. WM owns and manages a fleet of around 800 trucks (each truck has different functions depending on the type of service provided), with a total of 29 garbage transfer stations. Additionally, WM currently owns 2 landfills, shares 3 joint venture landfills, and holds operating contracts for 3 more landfills. WM currently operates 8 liquid and hazardous waste treatment facilities, and 3 composting facilities. WM provides services at 70 locations in New Zealand. In New Zealand, WM earns revenue from integrated waste management services including garbage collection, transfer station operations, landfill, recycling, hazardous waste disposal, and industrial waste treatment. The company serves more than 200,000 customers. The company's main services include: (i) residential garbage collection: roadside collection and transportation of household waste to transit stations or disposal facilities, generally granted by local councils; (ii) commercial waste collection: regular and temporary garbage collection and transportation from commercial, industrial and construction customers and transfer to transfer to transfer stations or directly to dumps; (3) solid waste treatment and disposal services: development, investment and operation of modern landfills, transfer stations and recycling facilities across New Zealand; (4) Liquid and hazardous waste: collection, processing, treatment and recycling of hazardous and non-hazardous liquid waste , medical waste, solids (including packaged goods requiring safe disposal), and solvents. The number of projects at hand is plentiful. Pioneer Environmental has a total of 26 environmental and alternative energy projects, including 14 waste-to-energy projects; 3 landfill projects; 3 anaerobic digestion technology treatment projects; 1 garbage collection, storage and transportation project; 2 waste electronic and electrical dismantling projects, and 3 biomass resource power generation projects. The facility handles about 7.53 million tons of household waste per year, and disassembles about 3.2 million pieces of electrical and electronic equipment per year. Our view: Given the weak operating performance of Pioneer Environment in the past, it will take time for the market to regain confidence in the company. Since the beginning of 2016, there has been little news about the company, as management has been focusing on WM's acquisition and business development. We believe that the market does not have high expectations for a profitable recovery in pioneering environments. After the company's acquisition of WM is completed, the company's operating performance and financial situation will improve markedly, which will attract market attention. It is currently difficult to predict when construction of the project obtained by the company will begin. However, the company's good number of project orders will provide the company with medium- to long-term growth potential. After the transaction to acquire WM is completed, the shareholding ratio of Shouchuang Shares will increase. We expect that Shouchuang Environmental will become a waste disposal business platform. Investors may be worried about the slump in the company's trading volume, especially the current market conditions fluctuate, but as the company's operating performance improves, the liquidity of shares is expected to increase. Catalysts: Announcing 2016 interim results, successfully identifying M&A opportunities, and news about new contracts.