Events: The company released an annual report showing that in 2016, the company achieved operating income of 2.166 billion yuan, up 7.1% year on year; gross profit margin of 9.02%, down 0.55 pct, year-on-year increase of 1.63 pct; net profit of 58.1999 million yuan, up 33.22% year on year; net profit after deduction of 507.8899 million yuan, up 57.39% year on year; basic earnings per share of 0.48 yuan, up 14.29% year on year. Comment: The LNG business performed excellently in the second half of 2016. In the first half of 2016, the company's LNG business revenue fell 11.95% year on year, but the revenue of this business increased 7.89% year over year while the gross margin remained at a level of 6% throughout the year, achieving a change in growth rate from negative to positive. Among them, Huaheng Energy, a subsidiary of the company (holding 73% of shares), increased the annual net profit of the company by 134% compared to 2015. Coupled with the company's LNG gas station business, it contributed a total of 41,812,100 million yuan after equity conversion, contributing the main force to the company's performance. Currently, the natural gas consumption regions covered by the company are within the optimal radius of road transportation costs. In the future, the company will actively explore the market demand of the LNG business, explore the application of distributed energy, and strive to become a leading enterprise in the LNG logistics distribution industry. Due to the expansion of the scale of the LNG business and the further decline in gross margin due to the expansion of the scale of the LNG business, the company's business structure has been significantly adjusted. According to the further expansion of the scale of Sinopec's LNG projects in Qingdao and Tianjin, the company's LNG business traffic volume in 2017 is expected to exceed 100% compared to 2016. Furthermore, the company's 2017 plan to raise 450 million dollars for capacity investment and informatization construction through non-public offerings in the secondary market also confirms the speed at which the company's business scale is expanding in this field. Since the LNG business has the characteristics of low gross margin and high cash flow, we estimate that as the scale of the LNG business continues to expand, the company's overall gross margin may decline year by year. The supply structure adjustment is beginning to show results. The new model of car-free transportation has begun. The company is currently actively adjusting the transportation structure for bulk goods and hazardous chemicals. In 2016, the capacity scale of high-margin goods was increased, and general cargo transportation was appropriately outsourced, so that the company's share of hazardous chemical transportation revenue increased from 20% in 2015 to nearly 50%. Industry entry barriers have gradually increased. In the future, we do not rule out the possibility of the company expanding cooperation with more hazardous chemical manufacturers. At the same time, the company's newly established holding subsidiary, Diantech, obtained the qualification of a “car-free carrier” in Shandong Province in the first quarter of 2017. The “supply-capacity” information-based market platform built by it is expected that in the future, it will first be able to supply capacity to ports and large cargo owners, relying on the economic hinterland of Shandong Province. Through the multimodal transport logistics service model, it is expected that capital flow, physical logistics, and information flow can be gathered on the platform in the future, thus becoming a leading enterprise in the regional logistics industry. Due to the increase in expenses in the fourth quarter, the company's performance fell short of expectations. The company's net profit for the first three quarters of 2016 increased by 89.28% year on year, but the annual growth rate was only 33.22%. Among them, the company's net profit for the fourth quarter fell 32.62% year on year. Mainly, the company's management expenses and sales expenses increased significantly in the fourth quarter and non-operating income declined significantly. In total, the company's net profit for the fourth quarter decreased by about 12 million yuan, which in turn caused the company's annual performance to fall short of expectations. Profit forecast and investment rating: The increase in holdings rating is given considering that the company's LNG business has high entry barriers, benefiting from the recovery in industry prosperity, and is expected to continue to release performance in the future. Based on prudential principles, the impact of non-public offerings on capital dilution and performance has not yet been considered. We estimate that the company's 2017-2019 EPS will be 0.79 yuan, 0.96 yuan, and 1.1 yuan, corresponding PE 37 times, 31 times and 27 times, and upgraded to a “buy” rating. Risk warning: 1) The company's business development falls short of expectations; 2) the risk of a sharp drop in oil prices; 3) the risk of termination of non-public offerings;