Recently, Baoli Asphalt has issued a series of announcements to establish a crude oil processing and production asphalt project for Xinjiang Baoli Petrochemical in Xinjiang, and to cooperate with Xi'an Huatong New Energy Co., Ltd. to engage in natural gas business. On October 25, 2013, Baoli Asphalt issued the “Notice on Investing in the Establishment of Xinjiang Baoli Petrochemical Co., Ltd.”. The company and Urumqi Luxin Engineering Technology Consulting Co., Ltd. signed an “Investment Cooperation Agreement”. The two sides will cooperate to establish Xinjiang Baoli Petrochemical and invest in the construction of a “annual processing of 2 million tons of heavy crude oil to produce 1 million tons of heavy crude oil and re-transfer petroleum asphalt project”. The total investment of the project is expected to reach more than 1 billion yuan. The project aims to be completed and put into operation within one year. We expect the project to be completed and put into operation by the end of 2014. The processing volume of 2 million tons of crude oil for the Xinjiang Baoli petrochemical project can obtain 1 million tons of asphalt. We think the company's project may be built in stages. Assuming that the construction capacity of the first phase of the project is 1 million tons of crude oil processing capacity and 500,000 tons of asphalt, the company's net profit is expected to increase by more than 270 million yuan if the company constructs the first phase of the project and fully reaches production. On November 12, 2013, Baoli Asphalt issued the “Notice on Signing a Cooperation Framework Agreement with Xi'an Huatong New Energy Co., Ltd.” Baoli Asphalt plans to obtain 51% of the shares of the target company held by Xi'an Huatong through cash acquisitions and/or capital increases, and is expected to cooperate with Xi'an Huatong to develop natural gas business in the future. The locations of the current Baoli Asphalt and Xi'an Huatong cooperation projects are all located in local industrial parks. We believe that in addition to developing natural gas for urban residents, the above four cooperative projects are expected to vigorously develop industrial gas in the future, and Baoli Asphalt's profit is expected to increase rapidly. We expect Baoli Asphalt's EPS from 2013 to 2015 to be 0.18, 0.29, and 0.63 yuan respectively. According to 2014 EPS and 30 times PE, the company will be given a six-month target price of 8.70 yuan to maintain the “increase in holdings” investment rating. Risk warning: the risk of large fluctuations in crude oil and asphalt prices; the risk of a decline in the growth rate of investment in highway construction; the risk that business development will not meet expectations.