Incident: *ST Jichai's “Major Asset Exchange and Issuance of Shares and Payment of Cash to Purchase Assets and Raise Supporting Funds and Related Transactions” was unconditionally reviewed and approved by the Securities Regulatory Commission. State-owned enterprise reforms improve quality and efficiency. The Central Economic Work Conference in December 2016 emphasized that mixed ownership reform is a “breakthrough” in state-owned enterprise reform. In that month, CNPC passed the “Guiding Opinions on Market-based Reform of Group Companies” and “Opinions on Mixed Ownership Reform of Group Companies”, stating that it adheres to the principle of “highlighting the main business, optimizing the structure, revitalizing the mechanism, and improving efficiency”. The restructuring and listing of CNPC capital is an important step in CNPC's mixed ownership reform, which is expected to improve overall operating efficiency. The listing opens up financing channels and fundamentally improves profitability. According to the transaction report, the company's net profit from January to May 2016 was -149 million yuan, and net profit from the mother for the same period after the transaction was completed will rise to 2,928 billion yuan, completely reversing the loss situation. Financial subsidiaries with relatively weak group financing capabilities can use the platforms of listed companies to broaden financing channels, thereby expanding their business and improving their ability to withstand risks; on the other hand, they can strengthen the capital operation platforms of “integration of industry and finance” and “integration of finance” and “integration of finance” to enhance overall competitiveness. The advantages of a complete license are obvious, and fixed increases help increase performance. (1) *ST Jichai has a complete license plate. After the transaction is completed, the company will have financial licenses such as banking, insurance, brokerage, trust, and leasing, etc., and the licenses are quite complete. Financial control platform subsidiaries can exert the integration effect of industry and finance and integration synergy through various methods such as complementarity of business, resource sharing, implementation of comprehensive management, construction of shared financial infrastructure, and coordinated allocation of financial resources. (2) Bank of Kunlun: Combining industry and finance around the main petroleum business. As loan repricing factors subside, Kunlun Bank's performance is expected to pick up. In 2017, operating income is expected to rise to 5.372 billion yuan, achieving net profit going back to the parent company of 3.153 billion yuan. Kunlun Bank's energy enterprise customers account for more than 60% of the total number of public customers. With supply-side reforms, the “Belt and Road” policy, and debt-for-equity swaps, Kunlun Bank's non-performing loan ratio is expected to fall back to 1.5%. In the next five years, Kunlun Bank will continue to develop business around the energy industry chain and overseas energy markets. This round of fixed growth is expected to guarantee business development and capital adequacy plans for 2 to 3 years. (3) CNPC assets: Trust business benefits from favorable financial deleveraging policies. It is estimated that the operating income of CNPC assets in 2017 will rise back to 2 billion yuan, and the net profit will reach 1.5 billion yuan. Among them, Kunlun Trust will use a fixed increase of 7.227 billion yuan to strengthen business transformation and integration between industry and finance, helping to become a first-class domestic asset management platform, wealth management platform, and strategic win-win platform. (4) Insurance sector: Differential management to help the main business. CNPC's exclusive insurance company is the first self-insurance company in China. The continuous development of new types of insurance and the unified insurance plan for large stations and distribution networks will help maintain a high growth rate of premium income. It is estimated that premium income in 2017 will reach 1,278 million yuan, and net profit attributable to the parent company is 269 million yuan. Kunlun Insurance Brokers relies on CNPC's main business, has a mature business model and good profitability, and is expected to achieve net profit of 1.18 billion yuan to the parent company in 2017. Life insurance has made a breakthrough in the field of traditional life insurance, and the net profit of the parent company is expected to reach 3.53 billion yuan in 2017. China-Italy Financial Insurance is boosting the auto insurance business. As the business continues to develop, it is expected that a break-even profit will be achieved in 2017. (5) Other sectors: Diverse layout, each exhibition can do what it can. CNPC Finance mainly serves CNPC member units, and operating income remains steady. It is estimated that the net profit of the parent company will be 7.81 billion yuan in 2017. The Kunlun financial leasing license is scarce, and performance remains stable. The injection of capital after a fixed increase will promote asset securitization business and the construction of professional subsidiaries. It is estimated that net profit of 713 million yuan will be realized from the parent company in 2017. In addition, the addition of the company's participation in Chinese bonds and Bank of China International has also developed rapidly. The net profit of the parent company is estimated to be 653 million yuan and 994 million yuan respectively in 2017. Investment advice: Buy-A investment rating, target price of 23 yuan for 6 months. It is estimated that the company's EPS from 2016 to 2018 will be 0.61/0.70/0.78 yuan, and BVPS will be 10.41/11.1/11.89 yuan respectively. Risk warning: sharp macroeconomic downgrade/stricter policy regulation/business collaboration falling short of expectations.