Huayou Energy recorded core revenue of RMB 1,471 million in 2018, up 34% year on year, in line with expectations; net profit surged 1376% year on year to RMB 81.8 million, in line with expectations. We attribute our steady performance to the company's proper asset-light strategy and efficient management. We believe that the country's call to increase upstream oil and gas development will further boost performance growth in 2019. Therefore, we raised our 19-year paving earnings per share forecast from RMB 0.08 to RMB 0.09, maintaining our 20-year paving earnings forecast of $0.15, and forecasting earnings per share of $0.21 for '21. We raised our current target price from HK$0.96 to $1.02, corresponding to a price-earnings ratio of 10.0 times in '19. The current price has an upward margin of 65% from the target price, maintaining the buying rating. The performance is steady. Benefiting from the strong recovery in oil prices and the increase in capital expenditure of upstream oil companies, the company's drilling business revenue in 2018 increased 68.7% year on year to RMB 541 million, and completion business revenue increased 86.8% year on year to RMB 309 million. Total revenue from the two businesses increased 26.9% year on year to RMB 1,443 billion. The company's core costs are composed of raw materials and labor costs. Benefiting from effective cost management, the core cost rate decreased by 7 percentage points to 48% compared to 2017. The asset-light strategy has had remarkable results. Under the guidance of the company's asset-light strategy, the company's capital expenditure is strictly controlled. Furthermore, some assets in use have also been fully depreciated, resulting in a 22% year-on-year reduction in depreciation and amortization expenses, driving a 171% year-on-year increase in operating profit to RMB 127 million. The operating profit margin reached 9%, an increase of 5 percentage points over 2017. The balance ratio fell further from 50.8% at the end of '17 to 49.1% at the end of '18, driving the net interest rate up 5.2 percentage points from the full year of '17 to 5.7%. We believe that under the strategic guidance of strictly controlling capital expenditure, the company's operating leverage will further amplify the boosting effect of order inflows on net profit. Domestic opportunities. Based on national energy security considerations, the government urges domestic producers to increase capital expenditure related to natural gas to meet the growing demand for natural gas. Considering the considerable reserves and suitable geological extraction conditions, we believe that the Tarim gas field, southwest oil and gas field, and Changqing oil and gas field will be the main investment areas. At the end of '18, we observed rising rents for key oilfield production equipment, such as high-depth drilling rigs and high-horsepower fracturing pumps, and extensive personnel recruitment in these regions, which confirmed the strength of capital expenditure growth in 19. Given that Huayu is one of the major private operators in these regions, we expect CNPC to be one of the key beneficiaries of the increase in natural gas-related spending. Maintain the buy rating. We believe that the country's call to increase upstream oil and gas development will further boost performance growth in 2019. Therefore, we raised our 2019 paving earnings per share forecast from RMB 0.08 to RMB 0.09, maintaining our 20-year paving earnings forecast of $0.15, and forecasting earnings per share of $0.21 for '21. We raised our current target price from HK$0.96 to $1.02, corresponding to a price-earnings ratio of 10.0 times in '19. The current price has an upward margin of 65% from the target price, maintaining the buying rating.