The investment suggests that we lower the target price by 18% to RMB 18 (28 times the 2017 price-earnings ratio, 1.9 times the 2017 net market ratio). Jinhong Energy's rating was downgraded from “recommended” to “neutral.” The reason is that the second-quarter results were lower than expected. The company's operating income for the first half of the year fell 4% year on year to 1.1 billion yuan, and net profit was down 8% year on year to 130 million yuan, or 0.27 yuan per share. Revenue for the second quarter fell 22% year on year to 480 million yuan, and net profit was only about 47.7 million yuan, down 30% year on year, lower than our previous expectations. Cost control and operating capital. While revenue declined in the second quarter, the company's sales expenses increased 17% year over year to 11.7 million yuan. Since 2014, the company has repeatedly calculated asset impairment losses due to bad debts. By the end of the second quarter, it had accumulated bad debt losses of 27.4 million yuan. On the other hand, the accounts receivable balance has been rising for two consecutive quarters since the end of 2015, and the number of accounts receivable turnover days has increased to 62 days from 43 days at the end of last year. The progress of epitaxial expansion has temporarily slowed down. Due to the previous termination of the acquisition of Chuzhou Jinda Petroleum Co., Ltd., according to the relevant regulations of the exchange, Jinhong Energy is not allowed to carry out major asset restructuring until mid-October this year. The profit forecast and valuation lowered the 2016/17 earnings per share forecast 35%/40% to 0.57 yuan/0.65 yuan, taking into account that the company's performance in the first half of the year fell short of expectations and the slowdown in epitaxial expansion. The target price was lowered by 18% to RMB 18, corresponding to 28 times the 2017 price-earnings ratio and 1.9 times the 2017 net market ratio. The rating was downgraded from “recommended” to “neutral.” Demand for risky natural gas is weak, pipeline transportation costs have been lowered, prices at non-residential natural gas terminals have risen, and epitaxial expansion has further slowed. In the future, some equity financing may dilute existing shareholders' interests.