Profitability growth is expected in 2012: The company expects profit for the year ended 31 December 2012 to record a significant increase compared to the year ended 31 December 2011. The significant increase in profit was mainly due to increased sales of natural gas and related products and income from his investments. In the first half of 2012, the company's revenue increased 16% and profit increased by 43%. In addition to contributions from core business, the first half of the year confirmed other revenue and revenue of HK$47.89 million, mainly including income from more than 20 million shares sold, and other fixed interest income such as bonds. Benefiting from the continued increase in fixed income from bonds and financial leases in the second half of the year, and the increase in 100% private gas projects will increase the profit ratio attributable to shareholders. It is expected that the annual profit increase will reach about 60% year-on-year, with a profit of 6.7 Hong Kong cents per share. The core pipeline and distribution business continues to grow strongly, with a total gas sales volume of 6 billion cubic meters in 2013: Through a long-term partnership with CNPC, the company has 7 pipeline branch lines to control gas management rights in corresponding regions. This type of branch line has the characteristics of low investment, stable gas supply, and high gross margin. In 2012, the company's pipeline transportation and gas sales are expected to be 2 billion cubic meters each. At present, the company has applied to the local government for the construction of 5-6 branch lines of this type. After gas transmission for industrial users is completed, these branch lines will reach 1.7 billion cubic meters of pipe transmission. It is expected that the increase in pipeline transportation in 2013 and 2014 will be 1 billion cubic meters and 700 million cubic meters, respectively. In addition to the city's distribution of 3 billion cubic meters, the total gas sales volume will be 6 billion cubic meters in 2013. We believe that the company's planned target of 8 billion cubic meters of gas sales in 2015 may be achieved ahead of schedule in 2014, while the gas sales volume will reach 10 billion cubic meters in 2015. The profit contribution of the LNG business is worth looking forward to: At present, the company has established 2 liquefied natural gas processing enterprises in Qinghai, with a daily liquefaction capacity of 500,000 cubic meters, the gas purchase price in Qinghai is 1 yuan/cubic meter. In addition to processing fees and freight charges from Chongqing to Guangdong (1.5-1.6 yuan/m3), the cost to Guangdong is 3.5 yuan/cubic meter. Guangdong sells at 70-75% of the price of oil, or 5 yuan/cubic meter, with a net profit of about 1 yuan per cubic meter. The company built 6 LNG filling stations throughout 2012, and plans to build 10 LNG filling stations in 2013. By cooperating with local bus and long-distance passenger transport companies, the bus company provides land resources to build gas stations on the bus company's land. Currently, the company's LNG projects are still in the development stage. The most used ones are bus, long-distance passenger transport, and ship gas conversion projects. Relying on a close partnership with Kunlun Energy, it may be possible to obtain more competitive gas prices than the market. Furthermore, due to Kunlun Energy's 49% controlling interest in CNPC's Sino-Thai LNG project in the future, in addition to the company's 100% equity LNG project contributing to large profits, the company is also expected to share the rapid growth in CNPC's LNG performance driven by Kunlun Energy's LNG business. Raise the target price to HK$1.8, rated purchase: Regardless of the contribution of the new LNG business, we will update the company's profit forecast based on the growth of the pipeline transportation and gas sales business. Based on the industry valuation level, we gave the company 18.5 times the PE standard in 2013, and updated the target price to HK$1.8. The target price increased 46% from the current price, and rated for purchase.