Incident: The company issued a suspension notice on planning to issue shares to purchase assets. It intends to purchase whole/part of the shares of 1) Wojin Energy (hereinafter referred to as the “target company”) through the issuance of shares, and ② whole/part of the claims of the target companies of Tibet Kejian and Jiaze Venture Capital. CNOOC Wobang is a high-quality unconventional natural gas extraction company. The company is optimistic about its broad development prospects. This acquisition is the 3rd equity acquisition after 2 equity acquisitions in 2018. After the acquisition is completed, the actual shareholding ratio of the listed company in CNOOC Wobang will increase from 37.17% to 50.5%; in addition, the original debt of the target company will be repaid through stocks, which is conducive to relieving the debt pressure of the listed company and reducing the balance ratio. After the restructuring is completed, the actual shareholding ratio of the listed company to CNOOC Wobang will increase from 37.17% to 50.5% of the target company's registered capital of 50 million yuan. The original shareholding structure was: the listed company, Tibet Kejian, and Jiaze Venture Capital held 51%, 34%, and 15% respectively; in February 2018, the target company acquired 27.2% of CNOOC's shares with 1,244 billion dollars in cash, with no other operating business. The listed company originally held 51% of the controlling interest in the target company, thereby indirectly holding 27.2% of CNOOC's shares; furthermore, the listed company directly held 23.2% of CNOOC's shares, so it held a 50.5% controlling interest in CNOOC, but the actual shareholding ratio was 37.17%. After this restructuring, the listed company will hold 100% of the shares in the target company, so the actual shareholding ratio of CNOOC Wobang will increase from 37.17% to 50.5%. The target company's merger and acquisition debt will be repaid through additional stock issuance, which will help ease the debt pressure of listed companies. The 18-year target company used 1,244 billion yuan in cash to acquire 27.2% of CNOOC's shares, of which 50 million yuan of its own capital, the listed company provided shareholder loans of 599 million yuan, and shareholders such as Tibet Kejian provided shareholder loans of 575 million yuan. In this restructuring, the listed company will acquire other shareholders' claims against the target company by issuing shares, which is conducive to reducing the balance ratio of the listed company and the healthy operation of the company. As of February 2019, the total share capital of the company was about 102 million yuan, of which about 40 million shares were restricted shares; after this restructuring, the company's total share capital will increase again. Optimistic about the future development of CNOOC Wobang, the listed company promised to continue to acquire cash until 67% absolute holding company is optimistic about CNOOC's future development. To further strengthen CNOOC's ability to control, in November '18, the company signed a “Letter of Intent to Acquire” with the former shareholders of CNOOC Wobang. After completing the 18-year performance gamble, the company will continue to acquire 16.50% of CNOOC's shares in cash, thus controlling 67% of CNOOC's shares and becoming its absolute controlling shareholder. CNOOC Wobang is a professional unconventional natural gas extraction enterprise. It cooperated with CNPC to develop dense gas in Shilou West; gas sales volume in 2017 was 630 million square meters, up 125% year on year; revenue was 770 million yuan, up 112% year on year; net profit was 310 million yuan, up 175% year on year; and H1 gas sales volume was 363 million square meters in 2018. According to the acquisition report, CNOOC Wobang's gas production growth rate in 2018-2020 will remain above 16%, with a net profit of about 3.63/4.56/554 million yuan. Profit forecast: The company's performance forecast shows that net profit for 2018 was about 5.03 million yuan, so we lowered our profit forecast for 2018 from 8.03 million yuan to 5.03 million yuan. At present, the company has not announced the consolidated financial report. For the time being, we maintain our profit forecast for the time being in an unbalanced situation: net profit is expected to return to the mother's net profit of 1896/28.68 million yuan in 19-20. In addition, we gave and presented a profit forecast for the exam: 1) Regardless of this restructuring, CNOOC Wobang's 50.5% equity (actual equity is 37.17%) was combined, the company's net profit in 19-20 was 1.25/157 million yuan; ② With the completion of this restructuring, CNOOC Wobang's actual 50.5% equity was combined, and the company's net profit from 19-20 was about 235/285 million yuan; ③ After completing the 67% equity acquisition of CNOOC Wobang, the company's net profit from 19-20 was about 3.10/3.76 billion. Risk warning: valuation risk of assets to be purchased, risk of transactions being suspended/cancelled, gas production falling short of expectations, financial data and valuation 2016 2017 2018E 2019E 2020E