A description of the event. The company announced the 2016 interim report, achieving an EPS of -0.19 yuan, in line with expectations. Incident reviews. Coal production and sales increased year-on-year, with a month-on-month increase in the second quarter. In the first half of the year, the company produced 5.1763 million tons of coal, up 3.47% year on year; coal sales volume was 5.4519 million tons, up 13.52% year on year. 2,594,700 tons of coal were produced in the second quarter, up 0.51% from the previous quarter; 2,7635 million tons of coal were sold, up 2.79% from the previous quarter. The company's cost control was effective, and gross profit from tons of coal increased year-on-year in the first half of the year. In the first half of the year, the company's revenue from tons of coal was 228.38 yuan, down 15.50% year on year; cost per ton of coal was 184.18 yuan, down 24.78% year on year. The company's cost reduction paid off. The gross profit of tons of coal was 44.20 yuan, up 73.98% year on year; gross margin of coal increased 9.96 percentage points year on year to 19.36%. In the second quarter, the company's revenue from tons of coal was 220.83 yuan, down 6.49% from the previous month; the cost of tons of coal was 166.80 yuan, down 17.44% from month to month, gross profit from tons of coal was 54.03 yuan, up 58.44% from month to month, and gross margin of coal increased 10.03 percentage points from month to 24.47%. The company generated 158 million kilowatt-hours in the first half of the year, completing 52.67% of the annual plan. Expenses were controlled better during the period, mainly due to lower employee remuneration. The company's total annual expenses in the first half of the year were 371 million yuan, down 15.44% year on year. Among them, sales expenses and management expenses fell 15.92% and 27.99%, respectively. The main reason was a decrease in employee remuneration; financial expenses rose 10.99% year on year, and interest expenses increased mainly due to increased interest expenses. Overall, cost control was better. Sales picked up, combined with strong cost and cost control, and the second-quarter results reduced month-on-month losses. The company's sales picked up in the second quarter. Combined costs and expenses were better controlled, and attributable net profit fell a month-on-month loss of 49 million yuan to -71 million yuan. The recovery in the coal market in the third quarter will help the company to further improve its performance. Pay attention to the progress of local supply-side reforms and give it an “increase in holdings” rating. The company's endogenous growth potential is relatively limited, and we are concerned about the subsequent progress of supply-side reforms in Henan Province. We forecast the company's 16-18 EPS to be -0.13, 0.04, and 0.06 yuan respectively, giving it an “increase in holdings” rating. Risk warning: macroeconomic decline, supply-side reforms falling short of expectations