The company's recent situation The company announced on the evening of August 5 that the actual controller of the company signed the “Equity Transfer Agreement” and “Voting Rights Entrustment Agreement”. Our comments are as follows. Comment The Chaoyang District State-owned Assets Administration Commission will become the actual controller of the company. The actual controllers of the company, He Qiaonu and Tang Kai, plan to transfer 130 million shares of the company (5.0% of the total share capital) to Beijing Chaohuixin Enterprise Management Co., Ltd. (“Chaohuixin”) under a 5.9 yuan/share agreement, and unconditionally and irrevocably entrust voting rights corresponding to 450 million shares of the company (16.8% of the total share capital) to Chaohuixin. Chaohuixin and Yingrun Huimin, which transferred 5% of the company's shares in December 2018, are the same wholly owned subsidiary of the Chaoyang District State-owned Assets Administration Commission. After the transaction was completed, He Qiaonu, Tang Kai, and Chaoyang State-owned Assets Administration held 39.1%, 10.0% of the company's shares, and the voting rights ratios were 22.3% and 26.8%, respectively. The actual controller of the company was changed to the Chaoyang District State-owned Assets Administration Commission. State-owned equity investment is expected to mitigate equity pledge risks and enhance financing capabilities. Since the company's actual controller's share pledge ratio is close to 100%, this share transfer is expected to mitigate the actual controller's equity pledge risk. Furthermore, after the actual controller is changed to the Chaoyang District State-owned Assets Administration Commission, the state-owned asset background is expected to enhance the company's credit and enhance the company's own financing and project financing capabilities. State-owned assets may also provide the company with certain liquidity support to meet its own business development needs; at the same time, the state-owned assets background is also conducive to the company's future business development in the field of ecology and environmental protection. Under pressure to repay debts, full-year results are still under great pressure. As of the end of 1Q19, the company's balance ratio was 69.3%, the net debt ratio was 68.1%, and the total interest-bearing debt was 10.4 billion yuan. Furthermore, since most of the company's PPP projects were not consolidated, the corresponding liabilities were not reflected in the balance sheet. We estimate that this portion of debt also exceeded 10 billion yuan, so the company's debt repayment pressure is still high. Earlier, the company announced that it expects a net loss of 55-750 million yuan in the first half of the year (profit of 660 million yuan for the same period last year). Looking ahead to the whole year, we expect the company's revenue and profit to increase or remain under pressure due to the company's current debt repayment pressure. The valuation suggests that the company's current price corresponds to 17.5x 2020e P/E. As the company faces debt repayment pressure and project execution progress may still be slow, we expect the company's performance growth to be reduced by 96%/54% to 100.90 million yuan; due to the reduction in profit forecasts, we have reduced the target price by 31% to 6.74 yuan, corresponding to 20.0x 2020e P/E and 14% space, but since the actual controller changed to state-owned assets, the company's operations are already in an improvement channel, so we still maintain the “outperforming industry” rating. Venture financing and operational improvements fell short of expectations.