1. Incident Overview The company recently announced that it signed a strategic cooperation agreement with the Yongchuan District People's Government of Chongqing on August 28, 2017 to establish a strategic cooperative relationship on projects related to the comprehensive utilization of clean energy in Yongchuan District. The agreement stipulates that Houpu Co., Ltd. will establish a clean energy industry fund or introduce strategic investors to invest in construction projects including comprehensive utilization of shale gas, gasification of the Yangtze River, and safety (environmental protection) treatment, etc., driving a total investment scale of about RMB 4 billion. 2. Analyze and judge the continued recovery of heavy natural gas trucks. The construction of gas stations will benefit from the overall sales volume of the domestic heavy truck market in July reaching 93,900 units, a sharp increase of nearly 90% year on year. China's domestic natural gas heavy truck production was 7,568 units, a sharp increase of 463% year on year, continuing the high growth trend since this year; the cumulative production of heavy natural gas trucks in January-July reached 45,425 vehicles (according to Ministry of Industry and Information Technology certified production statistics), which surged 548% year on year. Continued improvement in downstream demand will be reflected in the number of LNG fueling stations to be built in the next two years. After the company's new Gaoxi base is put into operation, LNG/CNG production capacity will nearly triple, with sufficient production capacity. The entire industry chain layout has achieved remarkable results. Since diversification has boosted the company's performance, the company has successively acquired Corel, Hongda, and Chongqing Xinyu, improving the diversified layout of the natural gas industry chain and transforming from a single equipment provider to a comprehensive service provider for clean energy equipment. In the strategic cooperation agreement signed this time, projects such as comprehensive utilization of shale gas and safety (environmental protection) management have increased the profit growth points of the company's engineering business, and the layout of the entire industry chain has achieved remarkable results. Gasification of the Yangtze River is included in the strategic agreement, and the marine LNG market is broad. DNV GL predicts that LNG is the only clean fuel that can meet global shipping needs in the foreseeable period. In October '16, the introduction of the International Maritime Administration's new low sulphur standard will accelerate the spread of marine LNG from local to global. Currently, there are more than 60 LNG-powered ships in operation in China. According to the forecast of the Academy of Water Transport Sciences of the Ministry of Transport, China will build a total of about 12,000 to 14,000 inland waterway ships from 2017 to 2020. If 70% of them use LNG as fuel, there will be about 10,000 new LNG powered ships. As one of the companies with the most complete LNG layout for domestic ships, the company will benefit first. In this strategic agreement, LNG ship gas station projects and LNG ship transformation projects that the company can undertake in the Yangtze River gasification project are also included in the agreement. 3. Profit forecast and investment recommendations The company is expected to achieve net profit of 198 million, 277 million, and 363 million yuan respectively in 17-19, and EPS of 0.53, 0.75, and 0.98 yuan respectively, maintaining a “highly recommended” rating. 4. Risks suggest that the NEV policy is having a crowding out effect on the industry; oil prices have fallen beyond expectations and the promotion of LNG for ships has fallen short of expectations.