Description of the incident We recently followed Chendian International. The main opinions are as follows: Incident comment that the water diversion in the Dongjiang River is progressing smoothly, and the company's performance in the water supply sector is expected to increase rapidly. As of mid-2015, the Dongjiang Water Diversion Project has completed 68.42% of the annual investment plan, and the company has signed a water supply agreement with Guiyang County for the second phase of the project to lock in water supply demand ahead of schedule. In addition to the fact that the price of the company's water supply has not risen for 4 years, with water prices currently rising in all other counties and cities in Hunan Province, there are strong expectations that water prices will rise, and the company expects prices to increase by about 0.6 yuan. The rise in demand for water supply and the rise in water prices have given the company a double guarantee for business growth in the water supply sector. The China Resources direct electricity purchase project is progressing steadily, and the cost of electricity sales is expected to decrease. In 2015, the company had many discussions with China Resources Electric Power and China Southern Power Grid, actively promoted China Resources direct electricity purchase projects, and obtained support from the municipal committee and municipal government. Currently, 45% of the company's electricity purchases come from local hydropower and 55% from the South Grid. The implementation of a direct electricity purchase project can further reduce the company's electricity supply costs and increase the company's profit from electricity sales. The agricultural network is progressing steadily, which is beneficial to the company's development in many ways. In August 2015, the company was approved to fund 2.5 billion yuan of agricultural network upgrades, of which 500 million yuan of infrastructure funds within the central budget were fully paid in January of this year. With the gradual implementation of agricultural network transformation, rural electricity demand, which was previously limited by power supply equipment, will gradually be released, which will help advance the company's power supply business. Furthermore, the company plans to further promote the marketing information system for the company's power supply business through the transformation of the agricultural network and promote the intelligent process of the company's overall power supply service and information collection. At that time, the company can not only effectively reduce costs and improve efficiency, but also provide technical support and experience advantages for entering the electricity sales side. Entering the electricity distribution field from other places, the new establishment model is expected to accelerate the promotion of electricity sales. The company plans to jointly establish a power distribution company with the Guizhou Shuicheng County Government and Shuicheng Economic Development Zone Hi-Tech Development Investment Co., Ltd., and the company holds 51% of the shares. In entering the electricity distribution business in Shuicheng this time, the company has the following two advantages: ① the economic development zone guarantees the number of users who sell electricity in the future. In the current situation of oversupply of electricity, power sales companies have greater bargaining power over power generation companies; ② the Shuicheng County government can assist the company in applying for electricity sales licenses, coordinate cooperation between China Southern Power Grid and nearby power points and companies, and provide relevant policy concessions. This exploration of how to set up an electricity sales company will help the company develop its electricity sales business more smoothly and rapidly in the future, and will greatly help the company seize the electricity sales market in the future. Investment recommendations and valuation: The company's EPS from 2015 to 2017 is expected to be 0.656, 0.744, and 0.810 respectively, maintaining the “buy” rating. Risk warning: systemic risk, risk of rising water prices falling short of expectations, electricity reform falling short of expectations