Key investment points: Northwest special steel leader to build an integrated coal-iron ore-steel industrial chain. The company is located in Xining City, Qinghai Province. It is the largest special steel production base in northwest China and a national military product supporting enterprise. The company has the advantage of an integrated industrial chain and has created three major industrial segments integrating “steel smelting” - “iron ore mining” - “coal coking”. Among them, the steel business is the company's core business, contributing 74% of the company's revenue in 2014. The company is located in an important area along the Belt and Road, and will continue to benefit from the development of China's high-end equipment manufacturing industry and the Belt and Road strategy in the future. The manufacturing industry is the cornerstone of take-off, and China's special steel industry has ushered in strategic development opportunities. Foreign special steel production accounts for about 10 to 12% of total steel production, and the gross margin is between 20 and 30%; China's special steel accounts for only 5%, and is mainly in the middle and low end. The gross margin level is only about 10%, so there is huge room for improvement. In May 2015, the State Council issued the “Made in China 2025” plan, which lays out to comprehensively promote the implementation of the manufacturing power strategy. Special steel is a key material required for major equipment manufacturing and construction of key national projects. It is widely used in various fields such as military industry, high-speed rail, and nuclear power. It is the cornerstone of the manufacturing industry's take-off. It will continue to benefit in the future, and is expected to usher in strategic development opportunities. Technological reforms have increased high-end production capacity and promoted the reversal of the bottom of the company. The world's special steel production is concentrated in countries such as Japan/America/Germany/France/Italy/Sweden, and China's special steels are mainly in the middle and low end. In recent years, the company has made efforts to invest in transformation and upgrading projects represented by large and small bars. After the technical reform is completed, the middle and high-end production capacity will increase from less than 300,000 tons to more than 1 million tons. The company's small bar technology reform was completed in 2014, and it is expected that the big bar technical improvement project will be completed in 2015. The company's product structure will be greatly optimized, and high-end production capacity will be greatly increased. It is estimated that the total net profit of large and small bar projects after delivery can contribute 369 million yuan to the company. As its production capacity is gradually released, it will help the company reverse from the bottom. Fixed-increase financing removes financial burdens and helps performance explode. The company plans to increase no more than 1,104 billion shares, with an issue price of 576 yuan/share, and no more than 6.358 billion yuan in financing. The lockdown period is three years, all of which will be used to repay bank loans. If this financing is successfully completed, we estimate that the annual net profit could be increased by about 360 million yuan. The company's balance ratio is high (84.58%, industry average 61.57%), and the financial burden is heavy. The financial expenses for 2012/13/14 were 4.62/5.12/606 million yuan, respectively, and the total profit for the same period was 127/-0.02/214 million yuan, mainly due to the company's large-scale investment in technology reform and upgrading in the early stages. This fixed increase in loan repayment will greatly reduce the burden on the company and help its performance explode greatly. Executives and employees participate in fixed growth, which greatly stimulates the company's vitality. With this fixed increase, the company's directors, executives and core employees subscribed for a total of 3.899 million shares at 22.4582 million yuan, and the lockdown period was 3 years. We believe that on the one hand, this will greatly stimulate the company's vitality from top to bottom, and on the other hand, it will also show the company's confidence in its long-term development. The first “buy” rating was “given”, and the target price was 13.30 yuan. We are very optimistic about the investment value brought by the company's reversal from the bottom. The release of high-end production capacity and the drastic reduction in financial burdens will lead to a major explosion in performance. It is estimated that in 2015-17 EPS will be 0.19, 0.31, and 0.42 yuan respectively (assuming a fixed increase in 2015 and a share capital increase starting in 2016), 70 times PE in 2015, with a target price of 13.30 yuan for six months, covering the first time, giving it a “buy” rating. Risk warning. The progress of the technical improvement project has fallen short of expectations. Orders for military goods fluctuated greatly.