Net profit loss for the first half of the year was 190 million yuan. The company achieved operating income of 4.9 billion yuan in the first half of the year, a year-on-year decrease of 28%; net loss of 190 million yuan, a year-on-year increase of 12%; equivalent to a loss of 0.19 yuan per share, of which EPS for the first and second quarters was -0.12 yuan and -0.07 yuan respectively. The main reason for the decline in operating income is the decline in logistics business revenue. Revenue from the main business declined, with gross profit of 47 yuan per ton of coal (1) Coal business: In the first half of the year, revenue was 1.25 billion yuan, down 4.1% year on year; operating cost was 1 billion yuan, down 15% year on year; gross profit margin was 19%, up 10 percentage points year on year. In the first half of the year, the company achieved raw coal production of 5.18 million tons, an increase of 3.6% over the previous year. According to raw coal production estimates, in the first half of the year, the company's tonnage of coal revenue was 240 yuan, down 7.4% year on year, up 23.5% from the end of 2015; tonnes of coal cost was 194 yuan, down 17.6% year on year, up 7% month on month; and gross profit per ton of coal was 47 yuan, up 91% year on year, up 244% month on month. (2) Logistics business: It mainly includes production equipment such as excavators, and the supply of materials such as steel. In the first half of the year, we achieved operating income of 3.53 billion yuan, a year-on-year decrease of 34%; operating costs of 3.49 billion yuan, a year-on-year decrease of 33.9%; and a gross profit margin of 1.14%, an increase of 0.13 percentage points over the previous year. Development plan: Industrial expansion, promotion of transformation The company focuses on the “coal-based, diversified development” strategy, and actively cultivates new profit growth points: (1) promote local conversion and utilization of low calorific value coal and poor quality coal, and promote the completion of the Baiping gas power generation comprehensive utilization project; (2) plan to invest appropriately in power plants and the new energy industry with mature technology, and establish a long-term product supply cooperation mechanism with power companies to form a strategic pattern of coal power integration. It is estimated that the company's EPS for 16-18 was 0.02 yuan, 0.24 yuan, and 0.24 yuan, respectively. The company's main business profit is weak. Currently, it is seeking transformation, but the specific plan is unclear. Maintain a “hold” rating. Risks suggest that supply-side reforms have fallen short of expectations, and coal prices have fallen beyond expectations.