Gas transmission volume in Yuji has increased dramatically. Pipeline costs and prices have been determined and lowered at the same time. Stimulated by policies to promote natural heat consumption, domestic natural gas consumption in the first half of the year reached 15.2%, production growth rate reached 10.1%, and the gas transmission volume of the Yuji pipeline was 2,063 billion cubic meters, an increase of 52.36% over the previous year, helping natural gas and pipeline revenue to increase 37.11%. At the same time, the Development and Reform Commission approved pipeline gas transmission costs. The depreciation period was changed from 20 to 30 years, and the semi-annual pipeline depreciation cost was reduced by HK$54 million; gas storage depreciation was changed from 14 to 30 years, and semi-annual natural gas storage depot leasing costs were reduced by about HK$33.67 million, helping to increase gross margin. In addition, the company's repayment of long-term loans has also reduced interest costs, helping Yuji Pipeline's performance to recover. Recently, the Development and Reform Commission approved the cost and freight of the long-distance pipeline. As far as the Yuji Pipeline is concerned, due to the adjustment of the freight rate, the pipeline's gas transmission prices to Shandong and Henan, which are the main gas transmission destinations, have dropped by about 9% and 11% (about 4 cents/cubic meter), respectively. Under the same gas transmission conditions, the revenue of the Yuji pipeline may decline. However, the cost approved by the Development and Reform Commission (based on 2016) was reduced by 216 million yuan, about 35%, compared to the amount reported by the enterprise. Of these, depreciation expenses were reduced by more than RMB 89.89 million, and storage expenses were not included in the approved costs. In the future, pipeline companies will no longer have to pay gas storage leasing fees. Due to the simultaneous compression of costs, we believe that the current reduction in gas transmission prices will have little impact on the company's profits; in particular, Henan, Hebei, and Shandong are key regions to promote coal-to-gas conversion, and pipeline gas demand is expected to grow rapidly in the future. Terminal handling volume increased steadily, import volume continued to grow against the backdrop of declining domestic oilfield production. Huade Petrochemical Terminal handled 6.39 million tons of crude oil in the first half of the year, up 14.11% year on year; Guande's other six crude oil terminals had throughput of 112 million tons, up about 12.00% year on year. However, the company's crude oil terminal performance was HK$519 million, down 3.12% from the same period last year, mainly due to exchange rate changes and the expiration of the income tax concession period. As domestic demand increases and oil and gas reforms advance, domestic crude oil demand continues to grow. At the same time, production in domestic oil fields has declined due to reduced capital expenditure. It is expected that the crude oil terminal business will continue to grow in the future. LNG has begun to contribute to performance. In the future, it will become a new growth point for the company's performance. The company will stop the tanker leasing business, and its contribution to this business performance will decrease. However, the two APLNG project ships invested by the company in the first half of the year were launched. Together with one APLNG project ship and two PNGLNG project ships that have already been put into production, a total of 25 voyages were completed in the first half of the year, achieving a total investment income of HK$24.36 million, an increase of 28.08% over the previous year. It is expected that three more APLNG project ships will be put into operation within the next year. Against the backdrop of vigorous promotion of natural gas utilization and insufficient domestic production, the company's LNG shipping business will become a new profit growth point for the company. Driven by the recovery of gas transmission in the Yuji pipeline, the re-approval of freight rates and costs, and the launch of new LNG carriers, the company is expected to achieve net profit of HK$14.16, 15.41 and HK$1,625 million respectively from 2017 to 2019. EPS is 0.57, 0.62 and HK$0.65 per share, corresponding to current stock prices PE of 8.46, 7.77 and 7.37X respectively, maintaining the “recommended” rating. Risks indicate the risk that gas field supply will be insufficient in the short term; the risk that the gas transmission volume of the Yuji pipeline will continue to be impacted by imported LNG; and the risk that LNG carriers will not be put into operation as expected.