Group 1 - The core viewpoint of the report is that China International Capital Corporation (CICC) has downgraded the valuation of Xinao Energy (02688) to a forecast price-to-earnings ratio of 10 times, down from 11 times, with the benchmark year moved to 2026 and the target price adjusted from HKD 74.6 to HKD 73.66, while maintaining a "Buy" rating [1] - Xinao Energy's core profit for the first half of the year decreased by 1% year-on-year to RMB 3.2 billion, which is in line with market expectations [1] - CICC anticipates that the demand for heating will rebound as winter temperatures return to normal in the fourth quarter, with a forecasted 2.2% year-on-year increase in retail gas volume for 2025 [1] Group 2 - The gross profit margin for the retail gas segment is expected to be 10%, while the annual increase in new residential connections is projected to decline by 8% to 1.49 million households, indicating a further slowdown in the downward trend [1] - In the energy sales segment, CICC predicts a slight recovery in sales in the fourth quarter due to normalized heating demand, with an overall year-on-year increase of 4% in energy sales for the year [1] - Due to weakened operational performance, CICC has revised down the company's earnings for the next two years by 0.1% and 1.8%, with a compound annual growth rate of approximately 4% for earnings from 2024 to 2027 [1]