The company achieved steady profit growth in the first half of the year, and the performance was in line with our expectations. In the first half of the year, the company achieved operating income of 3,578 billion yuan, an increase of 102.61%, operating profit of 260 million yuan, an increase of 69.36% over the previous year, net profit of 191 million yuan, an increase of 70.63% over the previous year, and earnings per share of 0.2 yuan, which is in line with our expectations. Benefiting from the impact of the prosperity of the coke industry, the profitability of the company's coke business continues to increase. The coking coal factory in Shanxi is 1,700-1,800 yuan/ton, a cumulative increase of about 600-800 yuan/ton compared to the beginning of the year, and the cumulative increase has reached 50%-70%. Since coke is in a boom cycle, the actual price of coke has risen from 1,700 yuan/ton at the beginning of the year to 3,000 yuan/ton. The cumulative increase has reached 76.47%, exceeding the pressure brought about by rising coking coal. As a result, although the company faces rising upstream costs, it is able to achieve cost transfer. In the first half of the year, the gross margin of the company's coke business reached 29.9%, the highest level since 2006. The company's 3 #1。 The 65-hole coke oven was successfully put into operation in May this year. Coke production increased over the same period last year. In the first half of the year, the company achieved coke revenue of 1,444 billion yuan, an increase of 136.95% over the previous year. Upstream iron ore prices have increased significantly, and the gross margin of the company's pig iron business has declined. The company has a production capacity of 1 million tons of pig iron and needs to purchase 1.5 million tons of iron ore (65% grade) every year, but the average price of iron ore to the factory in the first half of this year was 1,700-1,800 yuan/ton, an increase of 70% over last year. In addition, coke costs are also rising, leading to a decline in the company's pig iron business profit margin. In the first half of the year, the company achieved revenue of 1,486 billion yuan, a year-on-year increase of 46.11%, while costs increased by 49.53% year-on-year. The gross margin of pig iron was 9.21%, down 2 percentage points from the same period last year. Earnings forecasts and ratings. We expect that in 2008, 2009, and 2010, the company will achieve net profit of 379.6674 million yuan, 565.6544 million yuan, and 659 million yuan respectively. Based on the calculation of the total share capital after the share capital increase this year, the earnings per share are: 0.45 yuan, 0.67 yuan, and 0.78 yuan, respectively. The corresponding dynamic price-earnings ratios are 22 times, 15 times and 12 times, respectively, and we give it an “increase in holdings” rating. Risk warning: Cyclical risks in the industry and the risk of excessive reliance on important raw materials, etc.