Due to slower growth in natural gas sales and lower gas sales spreads, the company's annual results in 2017 were worse than we expected.

The company's revenue increased 28% year-on-year to HK $2.75 billion, while shareholder net profit increased 29% to HK $221.4 million.

The company expects natural gas sales to grow by about 30 per cent to 876.7 million cubic meters in 2018, and its gas transmission business is expected to grow significantly to more than 500m cubic meters. Environmental protection policies at the national level, local governments speeding up the implementation of "coal to gas" and adequate supply are all conducive to promoting natural gas consumption.

We expect the company's gas sales spread to improve in 2018. Natural gas consumption by other industrial users is expected to maintain rapid growth, and we expect the company's customer consumption structure to be much better than in 2017.

The company expects new customers to grow by about 15% in 2018.

Maintain the company's target price at HK $3.54 and maintain its "buy" rating.