Key investment points: It is proposed to issue shares to purchase natural gas and other urban operation assets and raise supporting capital. By issuing shares, Shengli Co., Ltd. plans to purchase underlying assets such as 100% of the shares of Jingzhou Jinghu Real Estate Development Co., Ltd. and Chongqing Xianda Industrial Co., Ltd. and 49% of the shares of Bazhou Shengli Shunda Gas Co., Ltd. held by Bazhou Shunda Natural Gas Co., Ltd. and at the same time raise supporting capital. Currently, the transaction method and underlying assets have not yet been finalized, so there is a possibility of readjustment. Accelerate the development of natural gas business. The company began a strategic transformation in 2012, positioning the clean energy natural gas industry as the company's leading industry in the future, and accelerated development of the company's natural gas business in 2016. Since 2015, the company has successively acquired natural gas city operation assets and expanded its natural gas business. This transaction will help the company expand the natural gas market and gradually improve the industrial chain. Change the use of capital raised and develop natural gas pipeline network business. In order to adapt to changes in the market environment and accelerate the development of natural gas business, the company decided to change the use of capital raised to supplement the working capital required for the compressed development of natural gas business in Qingdao Runhao and Dongtai, vigorously promote and develop the natural gas pipeline network field with larger profit margins, higher profit stability, and better development prospects, and improve the efficiency of the use of capital. The total investment amount for the new gas station project of Qingdao Runhao and Dongtai Compression was 60.87 million yuan. The company decided to use all of this investment amount to permanently supplement the working capital required for the development of the natural gas business of Qingdao Runhao and Dongtai. Local pipeline companies will benefit from pipeline network reforms. Judging from the current gas pipeline network reform method, the backbone network will be the first to be divested, and in the future, local piping and transportation enterprises will be able to access the backbone network as a third party to transport natural gas by paying pipeline transportation fees. With the further deepening of the pipeline network reform, the gas purchase costs of local pipelines and transportation enterprises will be reduced, and the sales volume of natural gas will increase. The company's vigorous development of natural gas pipeline business is expected to benefit from gas pipeline network reform. 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.