Summary of Investment

– Geo-replication of the Grandblue model again;

– Extend business to the watershed management sector, and build new points of growth.

Investment Advices

Business of water supply, sewage treatment and gas service has embraced steady operation and growth, contributing stable cash flow to the Company, as well as supporting the Company`s expansion of solid waste treatment, with its focus mainly placed on market expansion schedule of solid waste treatment and hazardous waste treatment. Based on the above analysis, we predict the Company`s net profits of 2017 and 2018 will reach RMB603 billion and RMB709 million, respectively; earnings per share (EPS) will be RMB 0.79 and RMB 0.93, respectively, equivalent to 18.4/15.6 times price-earning ratio (PER) of 2017/2018; the target price is adjusted to RMB17.4, with a “Accumulate“ rating. (Closing price as at 15 Sep 2017)