Incident: The company released its 2016 performance report. For the full year of 2016, the company achieved a total operating income of HK$1,767 billion, a year-on-year decrease of 13.6%, and achieved net profit to mother of HK$1,004 billion, a slight decrease of 2.1% over the previous year. Key investment points: The increase in investment income hedged the decline in Yuji Pipeline's performance. The annual results were basically in line with expectations that the company's joint ventures and joint ventures achieved a total performance of HK$780 million in 2016, an increase of HK$108 million over the same period last year. The vast majority of this increase contributed to the increase in revenue at Guande's crude oil terminal after the liberalization of domestic crude oil imports. Due to the impact of imported LNG at low prices, Yuji Pipeline's gas transmission volume to Shandong Province, which has the highest gas transmission price, continued to decline, causing Yuji Pipeline's gross profit to drop by about HK$140 million over the same period last year, which ultimately dragged down a slight decline in performance. The future growth rate of crude oil terminals is slowing down, and the LNG transportation and pipeline business is poised for a sharp drop in international oil prices. At the same time, domestic crude oil production declined in 2016. At the same time, the opening up of both crude oil imports by non-state enterprises helped China's crude oil imports increase dramatically last year. The throughput of Guande's joint venture and joint venture crude oil terminals increased 12.6% year on year, and terminal investment income grew rapidly. Although the decline in capital expenditure in the context of low oil prices may lead to a further decline in domestic crude oil production, the growth rate of bilateral access to imported crude oil has slowed down, and the growth rate of crude oil terminal performance may slow down somewhat in the future. Natural gas is being vigorously promoted as a clean energy source in China, and the slow growth rate of domestic resource production will help increase imports. In the medium term, the four APLNG carriers newly put into operation under Guande from the end of 2016 to the beginning of 2017 will become new profit growth points. Importing cheap gas may still suppress the Yuji Pipeline's gas transmission volume in Shandong in the short term, and the short-term performance of the Yuji Pipeline may still be under pressure. However, with stricter environmental protection and the implementation of coal-to-gas policies, Shandong's gas consumption is expected to grow rapidly to ease the oversupply of natural gas in Shandong. At the same time, the company is actively exploring natural gas markets in Hebei and other places, waiting for Yuji Pipeline's performance to bottom out and rebound. The company's EPS from 2017 to 2019 is expected to be 43.80, 47.69, and 50.80 HK cents/share, respectively. Corresponding to the current stock price, PE is 9.43X, 8.66X, and 8.13X, respectively, maintaining the “recommended” rating. Risk warning: LNG project ships fall short of expectations; the impact of imported LNG on the Yuji Pipeline's gas transmission volume in Shandong has further increased; natural gas consumption demand falls short of expectations