Report for the third quarter of 2016: The company's performance in the first half of the year increased and lost year on year. The company achieved operating income of about 452 million yuan in the first three quarters, a year-on-year decrease of 29.08%; net profit attributable to the parent company - 141 million yuan, a year-on-year decrease of 79 million yuan; basic earnings per share - 0.24 yuan, down 0.14 yuan from the previous year; and the 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, down 3.12% month-on-month and 22.35% year-on-year; net profit attributable to the parent company was -22 million yuan, up 16 million yuan from month on month and down 0.2 billion yuan year on year, corresponding to basic earnings per share of -0.04 yuan, up 0.03 yuan from month on month, unchanged year on 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 tonnes of steel profits in the second quarter. Steel mills increased capacity utilization in the third quarter, and production increased month-on-month, driving iron ore demand, and iron ore prices increased. The gross sales margin for a single quarter in the third quarter was 11.90%, up 13.13 percentage points year on year and 7.06 percentage points month on month. Iron ore is looking at declining volumes and prices for a long time. The company is in urgent need of transformation, and the country is affected by economic restructuring. Demand has declined. Demand has declined, and demand for iron ore has reached a ceiling in line with the general trend of removing production capacity. At the same time, the top four international iron ore giants are rapidly expanding production capacity and production, and mining costs are constantly decreasing, continuously squeezing domestic high-cost iron ore production capacity. In a situation where demand is weak and production capacity is increasing at low cost, it is difficult for mineral prices to rise. 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 seek 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, and the increase in steel production, which led to a rise in iron ore prices. The company's quarterly profit improved month-on-month in the third quarter, in line with previous expectations. Looking at the whole year, it is difficult for the company to reverse losses, and the company still needs to continue to reduce 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%. The low balance ratio facilitates the company's transformation; since the prospects for reversal of losses are still uncertain, maintaining the company's “neutral” rating, it is estimated that the 2016-2018 EPS will 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 governance, etc.