The 2012 edition of the “Natural Gas Utilization Policy” was released, and the natural gas vehicle marine market exploded: On October 31, 2012, the National Development and Reform Commission announced the revised “Natural Gas Utilization Policy”, which will be implemented on December 1, 2012. The policy divides natural gas users into four categories: priority, permitted, restricted, and prohibited. Compared with the 2007 version, the main difference is that LNG-powered vehicles/ships, peak-shifting gas storage facilities, natural gas hydrogen production, centralized heating, gas air conditioning, coalbed methane power generation, etc. are prioritized; it is also mentioned that it is necessary to continue deepening natural gas price reform, establish and improve upstream and downstream gas price linkage mechanisms, and study and implement differential gas price policies such as seasonal differences and interrupted gas prices. We believe that the general idea of the policy is to focus on cultivating downstream. Through natural gas price reforms, the cost of high-priced imported gas can be effectively transmitted to the downstream, thus ensuring the growth of upstream supply in the long term. Compared with civil and commercial use, natural gas for vehicles and ships has a higher affordability. Therefore, under the guidance of the new version of the natural gas utilization policy, with the formation of a multi-gas source gas supply pattern, the rapid construction and commissioning of LNG/CNG gas stations, and the development of related equipment supporting system technology, the marine economy of natural gas vehicles will lead to explosive growth in the future. The company focuses on the downstream marine LNG/CNG market, and future growth is worth looking forward to: it has now invested in the establishment of more than 80 gas projects in 11 provinces across China, and has 45 urban gas franchises. Recently, the company has also received several projects: Yutai County invests in coke oven gas to liquefied natural gas projects: a total investment of about HK$1 billion is expected, including plans to build a liquefied natural gas plant with an annual processing capacity of 200 million cubic meters of liquefied natural gas coke oven gas to liquefied natural gas. (Zaozhuang LNG/CNG) Bus Station Project: The company will invest in the construction of 6 LNG/CNG gas stations, with a total investment of about 108 million yuan. At the same time, it will exclusively provide the natural gas needed for all buses for Zaozhuang City Transport, with annual sales of more than 15,000 tons of LNG. “Gasification Shaoguan” project: It is expected to build a natural gas pipeline with an annual gas transmission capacity of 500 million cubic meters, build a liquefied natural gas LNG plant, invest in the establishment of a logistics company responsible for LNG and compressed natural gas CNG transportation, and build 20 LNG, CNG or LCNG fueling stations. The expected investment is approximately RMB 1 billion. Zouping Natural Gas Utilization Project: The project started on May 18, 2011, and the construction of about 69 kilometers of long-distance pipelines. The project is designed to have a gas transmission capacity of about 800 million cubic meters per year, with a total investment of about RMB 156 million. At present, the first phase of the project has been completed. In recent years, the company has focused on the downstream vehicle LNG/CNG market, which will directly benefit from the new natural gas utilization policy. Raise the target price to HK$1.45, rated purchase: The company's gas sales volume is expected to reach 4 billion cubic meters in 2012, and the company's gas sales volume and revenue are expected to exceed 8 billion cubic meters in 2016. The average annual growth in gas sales and revenue will remain above 30% in the next few years. We gave the company an average valuation of 17 times the PE standard in 2013, and updated the target price to HK$1.45. The target price increased 48% from the current price.