Incident: The company issued a fixed increase plan on November 30, 2016. It plans to issue no more than 164 million shares at a price of 9.12 yuan/share, and raise capital of no more than 1.5 billion yuan. Of this, more than 1 billion yuan will be used for gas pipeline construction, and 448 million yuan will be used to supplement working capital. Key investment points: A fixed increase will help expand the coverage of the pipeline network, and further strengthen the scale of assets and profitability. The capital raised by the company this time is mainly used for the Han'an Line and Zhonggui Line gas pipeline project, the Shangluo to Shangnan gas pipeline project, the Meixian to Longxian gas pipeline project, the Shangluo to Luonan gas pipeline project, and the Ankang to Xunyang gas pipeline project. After the fund-raising project is put into operation, the company will add more than 488 kilometers of long-distance pipelines to the existing more than 3,000 kilometers of long-distance pipelines. The annual gas transmission capacity will increase from 13.5 billion cubic meters to 14.5 billion cubic meters, and the company's main business revenue and profit level will increase. The natural gas marketization reform is beneficial to the company's growth, and the impact of the decline in urban fuel connection fees is limited. Recently, the Oil and Gas Department of the National Energy Administration issued “Opinions on Accelerating the Use of Natural Gas” (draft for comments) and proposed that natural gas should be gradually cultivated as the main energy source of China's modern energy system, demonstrating the country's firm determination to promote natural gas consumption. The company currently has an average price of about 0.21 yuan/square meter, which is a low level in the country, so there is not much room for the price of pipeline transportation to drop. Furthermore, the company's main business is the long-distance pipeline business, which accounts for more than 90% of the company's revenue. In the future, even if city gas connection fees are abolished, the impact on the company's performance will be small. Raise the profit forecast and keep the rating unchanged: Considering the performance growth and share capital dilution brought about by fixed increases, we kept the company's 16-year performance unchanged at 613 million yuan. We raised the company's 17-18 performance to 628 million yuan and 689 million yuan respectively (before adjustments were 613 million yuan, 615 million yuan and 679 million yuan respectively). The basic earnings per share after dilution were 0.48 yuan/share, 0.49 yuan/share, and 0.54 yuan/share. The PE corresponding to the current stock price is 21 times, 21 times, and 19 times, respectively. We believe that the company, as the leader of the Shaanxi pipeline network, is expected to benefit from the increase in consumption brought about by falling gas prices and the advancement of natural gas market-based reforms in the future. Maintain a “buy” rating by considering the increase in pipeline network coverage and the improvement in balance and liability structure brought about by the fixed increase in the company.