Introduction to this report: The company released its 2016 annual report. Net profit attributable to the parent company was 58.2 million yuan, an increase of 33% over the previous year. The future LNG distribution business is one of the main growth points of the company's business. Key investment points: Maintain an increase in holdings rating. Considering that the gross margin of some of the company's businesses may decline, the 2017/2018/2019 EPS was reduced to 0.87/1.16/1.35 yuan (the previous value of 2017/2018 EPS was 0.99/1.24 yuan, respectively). Maintain the target price of $39.6. The results of the annual report are in line with expectations. The company achieved revenue of 2.116 billion yuan in 2016, an increase of 7% over the previous year, and net profit attributable to the parent company of 58.2 million yuan, an increase of 33% over the previous year, which is basically in line with our expectations. The company's logistics and transportation business revenue increased 4.8%, and LNG sales revenue increased 7.9%. The reason is that the LNG (LPG) gas sales business reduced the company's procurement costs due to the guaranteed supply of dual gas sources at Sinopec's Qingdao LNG terminal and domestic gas liquefaction plant, and the gross margin increased to 5.9% year-on-year from 2.7% last year. The company's share of three fees increased slightly to 4.9% from 4.2% in the same period last year. The gas industry is booming, and downstream demand will grow rapidly. The increase in natural gas infrastructure, the price advantage over alternative energy sources, and the introduction of government policies to encourage consumption are important factors driving future growth in natural gas consumption. Under the direction of the country's overall policy of pressing coal to gas, efforts to convert coal to gas have increased in various regions. At the same time, due to the impact of upstream gas settlement gas prices and pipeline transportation prices and the widening of LNG price differences, the economic advantages of LNG have expanded, and the future profit margin of the industrial gas market is relatively large. The company is actively increasing the layout of LNG related businesses. The company actively prepares gas source procurement work for Sinopec's Guangxi Beihai and Tianjin LNG terminals, realizes multiple gas source supply layouts, and broadly explores major natural gas consumption regions such as North China, East China, and South China. At the same time, the company has laid out a number of direct LNG industrial supply projects, carried out trial operation of rural centralized heating services, and extended the downstream industrial chain. Risk factors: risk of falling oil prices, risk of cancellation of cooperation with Sinopec, risk of safety accidents.