Key investment points: Driven by capacity expansion demand and renewal demand, the development of the gas meter industry will accelerate. The market demand for gas meters mainly comes from two aspects: First, market expansion demand, which is mainly driven by the expansion of the size of the urban gas market. On July 12, 2017, the National Development and Reform Commission and the Energy Administration jointly issued the “Medium- and Long-Term Oil and Gas Pipeline Network Plan”, which proposed that China's natural gas pipeline mileage will reach 104,000 kilometers in 2020, corresponding to an average growth rate of 10.20% in 2016-2020. The urban gas consumption population will increase from 290 million in 2015 to 550 million in 2025. In the context of the overall recovery of the natural gas industry, the urban gas market is expected to expand. Second, there is demand for inventory renewal. Currently, China's gas meter industry is in the transition stage from traditional membrane gas meters to smart gas meters, and demand for products such as IC card smart gas meters and remote transmission gas meters will continue to increase. In summary, we believe that the development of China's gas meter industry is expected to accelerate under the joint impetus of the two major demands. The company has a leading position in the smart gas meter market, drawing on the steady growth of China's gas performance. Since its establishment, the company has been committed to smart gas metering related business, and has now become a leading smart gas meter manufacturer in China. In 2016, the company's revenue and net profit were 390 million yuan and 52 million yuan respectively, up 45% and 47% year on year, and the business development trend was good. Furthermore, in December 2014, the company introduced China Fuel Technology, a wholly-owned subsidiary of China Gas, as a strategic investor. Currently, China Fuel Technology holds 12.46% of the company's shares, making it the third largest shareholder of the company. China Gas is one of the largest urban gas operators in China. As of the end of the third quarter of 2016, it had a total of 311 urban gas projects in 25 provinces, cities and autonomous regions in China, which can connect about 31 million households. In 2016, China Gas contributed 92.29 million yuan in sales revenue to the company, an increase of nearly 200% over the previous year, making it the company's largest customer. We believe that with the overall recovery of the natural gas industry chain, China Gas's performance will grow rapidly, and the company's development is expected to benefit fully. In line with industry trends, the company's product hierarchy continues to improve. With the introduction of tiered gas pricing in cities, it has become a general trend for metering terminals with informatization, intelligence, and data transmission functions, such as smart gas meters and remote meters, to replace traditional membrane gas meters. In order to meet the development trend of the industry, the company is based on IC card gas meters as a popular product, and at the same time continuously improves the product hierarchy to expand its business to far-reaching transmission and electronic gas meters. In 2016, the company's IC card gas meters, remote meters, and electronic gas meters achieved operating income of 2.48, 0.99, and 30 million yuan, up 50.63%, 52.50%, and -5.32% year on year. Among them, the remote meter business had a CAGR of 167% in 2012-2016, which has become an important component of increased performance; electronic gas meters mainly include audio meters and ultrasonic gas meters, which are still in the market cultivation period. As the iterative process of the gas meter industry accelerates, it is expected to become the company's performance growth point in the future. The first coverage gave the company an “increase in holdings” rating: The company's net profit for 2017-2019 is estimated to be 73 million yuan, 103 million yuan, and 147 million yuan respectively. The corresponding EPS is 0.85 yuan/share, 1.19 yuan/share, and 1.70 yuan/share, respectively. Based on the closing price of 38.40 yuan on July 20, the corresponding PE is 45, 32, and 23 times, respectively. The company successfully went public in February 2017. With the launch of fund-raising projects, its business strength will be further strengthened. At the same time, combined with factors that accelerate the development of the gas meter industry, the company's performance is expected to grow rapidly, and for the first time, the company's performance is expected to grow rapidly, giving the company an “increase in holdings” rating for the first time. Risk warning: The development of the gas meter industry falls short of expectations, company remote communication, electronic gas meter business development falls short of expectations, and the commencement of company fund-raising projects falls short of expectations.