Key points of the report Event description The company released its 2015 three-quarter report today. In the first three quarters, the company achieved operating income of 3,958 billion yuan, a year-on-year decrease of 55.80%; realized net profit attributable to the parent company of 0.2 million yuan, a year-on-year decrease of 39.63%; and achieved an EPS of 0.02 yuan. According to this estimate, in the 3rd quarter, the company achieved net profit attributable to the parent company of 132 million yuan, an increase of 938.56% over the previous year; in the 3rd quarter, the EPS was 0.13 yuan, and the EPS in the 2nd quarter was -0.11 yuan. Incident review Production and sales increased slightly month-on-month in the 3rd quarter. In the first three quarters, the company's raw coal production was 4.168,000 tons, down 7.8% year on year, and commercial coal sales were 3.718 million tons, down 14.6% year on year. According to this estimate, the company's raw coal production in the third quarter was 1,384,800 tons, up 2.34% from the previous month, and commercial coal sales were 1,242 million tons, up 2.14% from the previous month. The month-on-month recovery in production and sales in the third quarter stemmed from a month-on-month recovery in traditional peak season demand. Cost control is difficult to cover weak coal prices, and gross profit declined sequentially in the third quarter. The macroeconomic economy remained weak in the third quarter. Downstream demand picked up seasonally but was relatively weak, and coal prices continued to fall due to easing supply and demand. The company's average price of tonnes of commercial coal in the 3rd quarter was 434.12 yuan, down 48.22 yuan from the first half of the year, the cost of tons of commercial coal was 351.48 yuan, down 44.69 yuan from the first half of the year, and the gross profit of tons of commercial coal fell 3.53 yuan to 34.41 yuan from the first half of the year. Overall, strong cost-side control partially cushions the impact of weak coal prices on company profits. The gross profit margin for the third quarter was 9.32%, up 7.04 percentage points from the second quarter, but still lower than the first quarter (11.62%). Expenses for the period were both reduced from month to month, and financial expenses dropped significantly. The company's expenses for the third quarter were 108 million yuan, a year-on-year decrease of 10.94%. Among them, sales expenses for the third quarter increased by 95.56% year on year, financial expenses fell by 018 million yuan year on year, a decrease of 31.92%, and management expenses fell 12.51% year on year. The overall cost control of the company is relatively good under weak market conditions. Cost and cost control helped turn losses into profits in a single quarter in the third quarter, and government subsidies boosted performance. The company's non-recurring profit and loss for the third quarter was 93 million yuan, mainly due to the fact that the company and its subsidiaries received a total of 126 million yuan in government subsidies. Net profit attributable for the third quarter was 32 million yuan, an increase of 149 million yuan over the second quarter. In the third quarter, the company achieved gross profit of 122 million yuan, a month-on-month increase of 91 million yuan, an increase of 295.22%, while expenses for the period fell by 22 million yuan month-on-month, a decrease of 17.16%. Overall, cost and expense control helped turn losses into profits in a single quarter. The growth potential of the traditional main business is limited. The focus is still on the transformation of “P2S” and state-owned enterprise reform to maintain the “buy” rating. The potential for the company's coal production capacity to grow is limited, so the transformation of Internet finance and the country's degree of improvement is worth looking forward to. We forecast the company's EPS for 15-17 to be -0.09, -0.15, and -0.13 yuan, respectively.