Investment highlights: A gas company that has successfully gone public behind the shell. CNPC Jinhong Energy Investment Co., Ltd. was established in 2004. In December 2012, the company implemented a major asset restructuring, achieved backdoor listing, and was listed on the Shenzhen Stock Exchange. In the process of business development, the company has continuously improved its industrial chain. Currently, it has formed upstream gas source development for natural gas, midstream long-distance pipelines, gas and transportation applications for downstream urban residents, etc., and has developed into a comprehensive gas utilization service provider. Furthermore, the company has carried out air pollutant control business through its subsidiary “Honest and Co-Innovation” and occupies a position in the field of environmental protection. Currently, the company's comprehensive natural gas business accounts for 90% of revenue, and environmental protection business accounts for 8% of revenue. The actual controller of the company is Chen Yihe, who holds a total of 27.38% of the company's shares through direct ownership and indirect ownership by Xinneng International and Xinyu Zhongxun. Mainly in long-term transportation pipelines, actively expanding upstream and downstream. The company's upstream gas source mainly comes from CNPC. At the same time, it is also actively developing various gas source channels such as LNG imports and coalbed methane. It has established 10 LNG storage stations and 12 CNG gas filling stations in its three regions, covering more than 20 cities in the three provinces. Midstream Pipeline currently operates five provincial long-distance pipelines: the Xiangheng Line (Xiangtan - Hengyang), Liaotai Line (Liaocheng - Tai'an), Taixin Line (Tianping Town - Xintai), Yingzhang Line (Yingxian - Zhangjiakou), and the Jizao Line (Wuyi - Jizhou). It has more than 1100 kilometers of long transportation (branch) lines and a gas transmission capacity of more than 4 billion cubic meters. Downstream owns pipeline gas concessions in Hengyang and other cities. Nearly 60 gas stations are under construction, and are cooperating with CSIC to develop distributed natural gas business. At the same time, it is actively developing markets through external mergers and acquisitions. In the second half of this year, it successively acquired shares in companies such as Tianhong Gas and Borui Gas Supply, and penetrated into markets such as the Yangtze River Delta and Beijing-Tianjin-Hebei. With the advancement of natural gas price reform and the further expansion of oil and gas price spreads, the economy of natural gas applications is further evident. At the same time, coal-to-gas, oil-to-gas and other projects being implemented by the country are expected to increase downstream natural gas demand. Jinhong Energy's industrial chain layout is complete, the operating area is broad, gas sales are expected to increase, and the performance growth rate is expected to reverse. Lay out air pollution control. The company has entered the field of environmental protection by relying on its subsidiaries to carry out air pollutant control. In 2015, the company acquired 49% of Zhengshi Tongchuang's shares for 430 million yuan and held 100% of its shares after completion. Zhengshi Tongchuang promised net profit of 0.6, 0.8, and 100 million yuan in 2015, 2016, and 2017. Zhengshi Tongchuang cooperates closely with the Chinese Academy of Sciences, etc., and has successively undertaken 863 key project projects in many countries. In the future, business will expand in the direction of more technology-intensive business, and the company is actively promoting the listing of Zhengshi Tongchuang on the 3rd board. In the first half of 2016, the company's environmental protection business achieved revenue of 63 million yuan, an increase of 152% over the previous year, and gross margin of 51%, an increase of 30 percentage points over the previous year. Profit forecasting and valuation. The company is expected to achieve net profit attributable to the parent company of 261 million yuan, 2.74 million yuan, and 307 million yuan in 2016-2018, corresponding to EPS of 0.54, 0.56, and 0.63 yuan, respectively. Referring to comparable company valuations, the company was given 40 times PE in 2016, corresponding to the target price of 21.6 yuan/share, and a buying rating. Risk warning. (1) The macroeconomic economy has been running at a low level for a long time, and downstream demand is weak; (2) policy risks such as gas prices and pipeline price adjustments; (3) poor integration of acquisitions.