The investment proposal maintains the “recommended” rating for Jinhong Energy, and the target price was lowered by 21% to RMB 22, corresponding to a price-earnings ratio of 25 times that of 2016. Recently, the company's stock price has declined sharply along with the A-share market, and valuation advantages have been highlighted; driven by environmental pressure such as “coal to gas,” we expect that the company still has potential for endogenous growth, and that epitaxial expansion may begin to gain strength. Since the economy of domestic natural gas prices is still weak and gas volume recovery is slow, we lowered the company's earnings per share forecast of 14%/14%/21% for 2015/16/17 to 0.68/0.89/1.08 yuan. The reason is that after domestic natural gas prices have been reduced, energy with comparable economic efficiency is still not competitive. Due to the recent rapid decline in oil prices, domestic natural gas prices have dropped by 0.7 yuan/cubic meter, which is still more than 20% more expensive than fuel oil and LPG; in addition to the slump in gas consumption by industrial users due to the downturn in the domestic macroeconomic economy, the company's gas sales recovery is slow. As a result, we lowered the company's gas sales growth rate in 2015/16/17 by 2%/7%/11%. Benefit from “coal-to-gas”. Jinhong Energy currently operates the Yingzhang Line, Hengshui-Jizhou, and Hengshui-Shahe natural gas transmission and branch pipelines in the Hebei region, and owns urban gas concessions in Zhangjiakou and eight surrounding counties and cities. With the strengthening of environmental collaboration between Beijing-Tianjin-Hebei in the future, the promotion of “coal-to-gas” among industrial users in Hebei Province is expected to accelerate. The epitaxial expansion is expected to gain strength. The “horse racing circle” era has come to an end, gas sales growth in the natural gas industry has slowed, and gas project integration may be the general trend; we expect that the company will continue to increase mergers and acquisitions in the gas and environmental protection business in the future, and epitaxial expansion is worth looking forward to. Profit forecast and valuation Since the economy of domestic natural gas prices is still weak and gas volume recovery is slow, we lowered the company's 2015/16/17 earnings forecast 14%/14%/21% to 0.68/0.89/1.08 yuan; currently, the company's stock price corresponds to the 2016/17 price-earnings ratio of 17/14 times that of 2016/17. Consumption of risky natural gas is sluggish; the strength of “coal-to-gas” in the Beijing-Tianjin-Hebei region falls short of expectations; epitaxial expansion falls short of expectations, etc.