Highlights of the report. A description of the event. Hanggang Steel Co., Ltd. released its 2016 interim report today. After retroactively adjusting the year-on-year base of the company's financial statements, the company achieved operating income of 9.353 billion yuan, a year-on-year decrease of 22.79%; operating costs of 8.509 billion yuan, a year-on-year decrease of 27.80%; realized net profit attributable to the parent company was 339 million yuan, or -254 million yuan for the same period last year; and achieved EPS of 0.23 yuan. Incident reviews. Improved demand in the main steel industry combined with cost reduction and efficiency, and the first half of the year's performance improved dramatically: the company fully completed asset restructuring and replacement in March of this year, and successfully purchased 100% of Ningbo Steel's shares, 87.54% of Ziguang Environmental Protection's shares, 97% shares in renewable resources, and 100% shares in renewable technology. The company's performance in the first half of this year improved dramatically compared to the same period of last year's retroactive adjustment. This is mainly due to the improvement in terminal demand in the steel industry combined with cost reduction and efficiency gains: 1) The overall recovery in manufacturing and construction since this year, confirmed by a significant increase in excavator sales of 4.84% year-on-year compared to the 41.65% growth rate in the same period last year, thus driving a recovery in demand for the company's main types of hot-rolled products; 2) The company effectively reduced production and operation costs through active technological transformation; 2) In March, Ninggang Steel's hot rolling process completed 199 yuan /ton, 18.2 yuan/ton lower than the budget. As a result, the improvement in demand for hot rolling combined with open source savings led to a sharp increase of 14.02 percentage points in the gross margin of the steel business over the same period last year, and contributed to an increase of 633 million yuan in gross profit in the first half of the year, which became the main reason for the company's performance to turn losses into profits. Furthermore, although the scale of the company's trade business such as scrap steel and ore expanded rapidly, the gross profit of the trade sector business decreased by 32 million yuan year on year due to the year-on-year decline in steel ore prices; although revenue from the environmental protection industry rose sharply, gross profit decreased by 28 million yuan due to the decline in gross margin. “Steel+environmental+renewable resources” is progressing steadily: through this replacement and restructuring, the company's business has thus transformed from a single steel to a diversified business pattern of “steel+environmental+renewable resources”. The main product of Ningbo Steel's 4 million production capacity is hot-rolled coil, which is a type with high added value, and the company's steel profitability is expected to increase; while Renewable Resources specializes in recycling and dismantling of end-of-life vehicles, waste metal dismantling and processing, Ziguang Environmental Protection specializes in sewage treatment, and Regeneration Technology specializes in wholesale of recycled metal materials, metallurgical materials, coal and steel, import and export business, and renewable materials research and development, etc., and the foundation for the company's transformation and environmental protection has been laid. The steel and environmental protection business pattern was established. In addition, the company also raised 200 million yuan to build an e-commerce platform for metal trade. It is committed to speeding up the pace of transformation and looks forward to the effective opening up of the company's future business development space. The company's EPS for 2016 and 2017 is expected to be 0.24 yuan and 0.28 yuan respectively, maintaining a “buy” rating.