2016 three-quarter report: The company's first-half performance increased year-on-year, and the company achieved operating income of about 452 million yuan in the first three quarters, down 29.08% year on year; net profit attributable to the parent company - 141 million yuan, down 79 million yuan year on year; basic earnings per share -0.24 yuan, down 0.14 yuan year on year; weighted average return on net assets -4.54%, down 2.58 percentage points from the previous year. Among them, the third quarter achieved operating income of about 154 million yuan, a year-on-month decrease of 3.12% and a year-on-year decrease of 22.35%; net profit attributable to the parent company was -0.2 billion yuan, up 0.16 million yuan from the previous month, and a year-on-year decrease of 0.2 billion yuan, corresponding to basic earnings per share of -0.04 yuan, an increase of 0.03 yuan over the previous year, which remained the same as the previous year. Demand for iron powder increased, and the company's profitability improved slightly in a single quarter due to the recovery in steel prices and tons of steel profit in the second quarter, steel mills increased capacity utilization in the third quarter, and production increased month-on-month, driving demand for iron ore, and iron ore prices increased. The gross sales margin for the third quarter was 11.90%, up 13.13 percentage points year on year and 7.06 percentage points month on month. Iron ore has seen a decline in volume and price for a long time. The company is in urgent need of transformation. Domestic economic restructuring has affected it. Demand has declined, there is a general trend of removing production capacity, and there is a ceiling in demand for iron ore. At the same time, the four major international iron ore giants are rapidly expanding production capacity and production, and mining costs are constantly decreasing, continuing to squeeze domestic high-cost iron ore production capacity. In a situation where demand is weak and low-cost production capacity is increasing, it is difficult for mineral prices to move forward. It is expected that it will still be difficult for the company to reverse losses in the later stages, and the company urgently needs to reduce costs and find a way out through transformation. The rise in mineral prices benefited the company in the short term. Maintaining the company's “neutral” rating benefited from strong demand for real estate and infrastructure, increased steel production, which led to a rise in iron ore prices. The company's profit improved month-on-quarter in the third quarter, which was in line with earlier expectations. Looking at the whole year, it is difficult for the company to reverse losses, and the company still needs to continue to cut costs or find a way out for transformation; currently, the company's total assets are 3.5 billion, and the balance ratio is only 11.64%, which facilitates the company's transformation; since the prospects for reversal of losses are still uncertain, maintaining the company's “neutral” rating, the EPS is expected to be -0.32, 0.01, and 0.01 yuan respectively. Risk warning: changes in the economic situation; fluctuations in raw material costs and product prices; corporate management, etc.