Investment highlights: Shengli Co., Ltd. announced its 2015 annual report. In 2015, Shengli Co., Ltd. achieved operating income of 2,509 billion yuan, -12.63% year-on-year; realized net profit attributable to the parent company of 287.394 million yuan, -21.70% year-on-year; and a weighted average return on net assets of 1.61%. In terms of per-share indicators, in 2015, the company achieved an EPS of 0.04 yuan, net cash flow from operating activities per share was 0.08 yuan, and net assets per share attributable to shareholders of listed companies were 2.32 yuan. The natural gas business developed rapidly and became the company's largest industry. The company has accelerated the pace of strategic transformation, and the natural gas business continues to maintain a rapid growth momentum. The company has accelerated the promotion of urban gas franchise mergers and acquisitions. By the end of 2015, the company had completed cooperation on projects such as Puyang in Henan, Bazhou in Hebei, Pulandian in Dalian, Puwan New Area, and Zhuanghe in Dalian, and the scale of natural gas increased rapidly. In 2015, the company's natural gas business achieved revenue of 716 million yuan, an increase of 149.59% over the previous year, accounting for 28.54% of the company's total revenue, making it the company's largest industry. The decline in profitability of traditional industries is dragging down the company's performance. The company's natural gas business expanded rapidly and profits were stable, but the shrinking scale of traditional business and declining profitability dragged down the company's performance. In 2015, the company's natural gas pipeline manufacturing, refined oil trade, and agrochemical business revenue decreased by 9.74%, 53.73%, and 23.68%, respectively. In particular, the gross margin of the agrochemical business fell 9.09 percentage points year on year. Affected by the overall economic situation, the company is speeding up the disposal and divestment of traditional industrial assets. Shengli Co., Ltd. announced its report for the first quarter of 2016. In the first quarter of 2016, Shengli Co., Ltd. achieved operating income of 601 million yuan, -14.18% year-on-year; realized net profit attributable to the parent company of 53.3691 million yuan, +557.13% year-on-year, achieved earnings per share of 0.07 yuan, and a weighted average return on net assets of 2.93%. The company's investment income for the first quarter was 60.9977 million yuan, an increase of 1306% over the previous year, mainly due to the transfer of its subsidiary Shandong Luyu Trading Co., Ltd. Use terminal resources to develop automobile charging and switching services. In order to develop new energy business, Shengli Co., Ltd. and Qingdao Teruide signed a “Strategic Cooperation Agreement” to jointly promote strategic cooperation in the field of automobile charging. This strong joint effort began in terminal fields such as gas stations owned by Shengli Co., Ltd. to promote new energy vehicle charging business cooperation. Through this strategic cooperation, the company will enter the field of automobile charging and switching, build a multi-level new energy supply system using the existing market terminal network, and open up new business growth points. Profit forecasts and investment ratings. We expect the EPS of Shengli Shares from 2016 to 2018 to be 0.40, 0.43, and 0.52 yuan respectively. According to the 2016 EPS and a price-earnings ratio of 20 times, we gave the company a target price of 8.00 yuan to maintain the “increased holdings” investment rating. Risk warning: transformation risk; natural gas business development progress falls short of expectations, etc.