Investment points: Recommended logic: (1) Sinopec Guande is a comprehensive crude oil and natural gas service provider, an international crude oil storage and logistics company. The market share of crude oil terminal business is stable, and profitability remains stable; (2) China's crude oil and natural gas (including LNG) demand and external dependence continue to rise, and market-based gas pipeline price reforms are progressing steadily, and the company is expected to benefit the long-term prosperity of the industry; (3) LNG shipping business continues to contribute investment income and will become a new growth point; (4) Actively developing clean energy services such as natural gas, etc. Eastern and western regions, Yuji Pipeline capacity expansion and transformation is imminent, and gas transmission volume is expected to rise steadily. The company is a comprehensive crude oil and natural gas service provider with stable profitability. Guande is an international petrochemical warehousing and logistics company with a total storage design capacity of 2.78 million cubic meters in the Middle East and Europe; the annual design throughput of its seven crude oil terminals is 272 million tons; the construction of LNG carriers has accelerated, with a total planned capacity of 1.388 million cubic meters; and the acquisition of Yuji Pipeline Company contributed major revenue. The company's profit level remained stable, with a compound growth rate of 31.3% in net profit since 2010. China's crude oil and natural gas demand and external dependence continue to rise. China's crude oil consumption grew at a compound rate of 6.2% from 2000 to 2016, and imports increased at an average annual rate of 11.2% from 2000 to 2016; external dependence continued to rise, reaching 65.95% in 2016. In 2016, LNG imports increased 32.6% year on year. With the accelerated construction of port terminal facilities, the continuous liberalization of crude oil import and use rights, the rapid development of LNG terminals and carriers, and the guaranteed yield of natural gas pipeline transportation permits, the company is expected to benefit from the boom in the industry. The crude oil terminal business has maintained a high market share, and its performance is growing steadily. The seven terminal companies had a cumulative throughput of 222 million tons in 2016, accounting for 58.3% of the total domestic crude oil imports of 381 million tons in that year, and have remained above 57% in the past four years, with a stable market share at a high level. In 2016, Huade Petrochemical contributed HK$243 million in operating profit, an increase of approximately 4.52% over the previous year, and an operating profit of HK$712 million, an increase of 14.49% over the previous year. An increase in refining crude oil processing capacity stimulates demand for crude oil, and Fujairah's tank capacity remains at 100% full capacity, all of which will contribute to a steady increase in crude oil terminal business. The LNG shipping business will become a new growth point, and the gas transmission volume of the Yuji pipeline is expected to pick up. According to the 2016 report, 3 carriers have been built and put into operation under the company's LNG shipping project, and 5 more are under construction to be put into use. They will continue to generate investment income in the future. The Yuji pipeline is facing difficulties due to large imports of LNG, but demand for natural gas in the provinces and cities along the route continues to rise. Domestic pipeline gas has a cost advantage over imported pipeline gas. This is expected to drive the gas transmission volume of the Yuji pipeline to rise steadily. Profit forecasts and investment ratings. We expect Sinopec Guande's EPS from 2017 to 2019 to HK$0.47, 0.51, and HK$0.54, respectively (diluted based on 2,486 billion shares). According to 2017 EPS and 11 times PE, we gave the company a target price of HK$5.17 and gave it an investment rating of “increased holdings”. Risk warning: Crude oil import quotas have been lowered, domestic and foreign LNG price spreads have narrowed, and natural gas pipeline transportation costs have been lowered.