Investment logic: China's demand for natural gas is growing rapidly, and supply is generally tight. Since 2017, China's natural gas market has been affected by macroeconomic stability, moderation, and environmental policies. The country's natural gas consumption has grown rapidly and resumed double-digit growth. The growth rates of natural gas consumption in 2017 and 2018 were 15.31% and 18.12%, respectively. The growth rate of natural gas production in China is far lower than the growth rate of consumption, and external dependence has rapidly increased to 45.3%. Pipeline network construction is lagging behind, and new gas sources and pipeline companies have been established to promote pipeline construction. The average annual growth rate of China's natural gas pipelines in 2015-2018 was only 5.9%, which lags behind the “13th Five-Year Plan” target of an average annual growth rate of 10.2%. The Development and Reform Commission clearly proposed “the establishment of a national oil and gas pipeline network company to separate pipeline transportation and sales.” We expect the National Oil and Gas Pipeline Company to be established within this year. The establishment of the State Pipeline Network Corporation will vigorously promote pipeline construction plans in accordance with government goals and speed up pipeline network construction. We expect to invest nearly trillion dollars in natural gas pipelines by 2025, driving investment in related pipelines to nearly 500 billion dollars. The steel pipe industry has had overcapacity for a long time, and the supply and demand pattern is expected to improve: China's welded pipe production capacity has continued to grow in recent years. From 2000 to 2014, the share of global production increased from 13.2% to 65.9%. Currently, China's steel pipe production capacity is serious, and market concentration in the industry is low, and market competition is fierce. We believe that the supply and demand pattern is expected to improve: on the demand side, the establishment of additional gas sources and pipeline companies will promote pipeline construction, pipeline investment will increase, and demand will increase; on the supply side, in the context of excessive steel pipe production capacity, corresponding companies will adjust product structures, export production capacity overseas, and backward production capacity will drop out of the market, and supply will decline. The trend of oversupply in the steel pipe industry will be mitigated to a certain extent, and the industry will gradually pick up. The company's production capacity was gradually released, and performance resumed growth: the company's fund-raising projects totaling 300,000 tons of steel pipe production capacity were put into operation in 2015 and 2019. The company's pipeline production and sales volume increased significantly. Production and sales continued to maintain high growth in 2018, reaching 940,700 tons and 914,400 tons respectively, up 14.19% and 12.18% year-on-year respectively. The company has advantages such as strong R&D capabilities, complete product categories, and strong customer resources in the steel pipe industry. We believe that the company will have a clear advantage in the new round of pipeline construction. Since 2017, the company's performance has clearly rebounded. In 2018, revenue was 4.888 billion, up 24.47% year on year, and net profit was 191 million yuan, up 17.44% year on year. We expect that as pipeline construction accelerates, the company will benefit significantly and that performance will continue to grow. The investment proposal estimates that the company's operating income for 2019-2021 will be 5.847 billion, 6.938 billion and 8.092 billion yuan, corresponding net profit of 238 million, 308 million yuan and 387 million yuan, corresponding EPS of 0.46, 0.59 and 0.74, respectively, and corresponding PE of 17, 13, and 10 times. First coverage, giving a “buy” rating. The pace of construction of risk pipelines has fallen short of expectations. Due to competition at low prices in the industry, gross margin has declined, and project progress has fallen short of expectations.