Key events in the report describe Jiugang Hongxing's performance forecast for the first half of 2016. During the reporting period, the company achieved net profit attributable to shareholders of listed companies of 227 million yuan; according to the latest share capital calculation, the EPS for the first half of 2016 was 0.04 yuan, the EPS for the same period last year was -0.25 yuan, and the EPS for the first quarter was -0.04 yuan. Incident comment: Strong steel mines increased smelting profits and turned losses into profits in the first half of the year: the company's main products were wire and bars. The growth rate of real estate and infrastructure investment has resumed since the beginning of the year, leading to an improvement in downstream demand in the industry. Combined with supply and low inventories, the overall price performance of steel in the half year of ore has been relatively weak: 1) Since 2016, the average quarterly price of rebar and wire in Lanzhou has continued to rise. The average quarterly price of rebar in the second quarter increased 14.86% year on year, while wire prices increased 13.17% year on year; There was also a recovery, but it still fell 7.41% year on year in the second quarter 。 Under the weak pattern of strong steel mines, the company's profit increased markedly in the first half of the year, successfully turning a loss into a profit. On a month-on-month basis, the improvement in the company's performance in the first half of the year was mainly due to a sharp improvement in the performance of the second quarter: the prices of rebar and wire in Lanzhou reached annual highs of 3,250 yuan/ton and 3,200 yuan/ton respectively at the end of April, and the company's gross profit per ton of steel was close to 1,000 yuan at one point. Even though steel prices have declined since the beginning of May, it still has a certain advantage over the same period last year. In the end, the company achieved net profit attributable to the parent company of 494 million yuan and EPS of 0.08 yuan in the second quarter. Despite the company's loss of 267 million yuan in the first quarter, its semi-annual performance successfully turned red. Expect the “Belt and Road” to contribute more to the company's performance: Overall, although the current industry profit has improved, subsequent substantial improvements in performance will still depend on the continued recovery of overall downstream demand in the industry. However, the gradual implementation of the “Belt and Road” plan will enable the company to show its location advantages along the Silk Road, thereby consolidating the foundation for long-term improvement in the company's performance. The company's 2016 and 2017 EPS are expected to be 0.05 yuan and 0.06 yuan respectively, maintaining the “increased holdings” rating.