Key investment performance summary: In the first half of 2016, the company achieved operating income of 18.43 billion yuan, a year-on-year decrease of 45.45%; net profit attributable to shareholders of listed companies was 227 million yuan, an increase of 114.82% over the previous year; net profit attributable to shareholders of listed companies after deduction was 227 million yuan, an increase of 114.82% over the previous year. EPS for the first half of the year was 0.04 yuan, and EPS for the single quarter was -0.04 yuan and 0.08 yuan respectively; industry profits continued to pick up: since the end of last year, weak recovery on the demand side combined with the inventory cycle, and industry profits began to rebound from the bottom. However, by the second quarter of this year, demand side expansion, led by infrastructure and real estate, caused steel mill orders to pick up rapidly, and industry profits rebounded on a large scale. Although the rapid decline in steel prices in May led to a contraction in industry profits, it stopped falling and stabilized in June, causing industry profits to return to an upward trend. According to our estimates, since the fourth quarter of last year, the gross profit of rebar steel in a single quarter was -3.5 yuan, 93.29 yuan, and 182.59 yuan respectively. The gross profit per ton of hot rolled plate was -94.53 yuan, 51.59 yuan and 322.86 yuan respectively. The gross profit per ton of steel in a single quarter for medium and heavy plate was -310.2 yuan, -46.96 yuan, and 53.53 yuan respectively. The gross profit of all types of the industry showed signs of gradual improvement; the company's net profit in the first half of the year increased from -267 million yuan in the first quarter to 267 million yuan in the second quarter At 494 million yuan, profit improved dramatically. The EPS for the second quarter was 0.08 yuan, and the profit was the best in a single quarter since 2011. Judging from the semi-annual reports of other listed steel companies that have been disclosed, the performance of the second quarter of this year has generally improved sharply, and the recovery in fundamentals is the main reason; demand is still improving in the short term: although the sharp decline in July data exceeds market expectations, excluding the impact of changes in statistics in Liaoning Province, fixed assets still fell from 12.2% to about 11.3% in July. This may be related to the severity of the July floods, and it is not yet possible to determine that the overall economy has begun to decline sharply again. At present, industrial chain inventories have basically returned to the bottom area at the end of last year. Strong downstream demand and extremely low social inventories since August are the main factors supporting the recent strength in steel prices. As the off-season for steel consumption gradually comes to an end, steel consumption will pick up seasonally starting in the middle to late. There is a possibility that steel prices will continue to perform, and the industry profit pattern is expected to be maintained; investment suggestion: The company is the only state-owned steel listed company in Gansu Province, and has a strong market geographical advantage in stainless steel and other products. The company plans to produce 6.27 million tons of steel in 2016. In the first half of the year, it has completed 45.85% of the plan, of which 52.12% of the plan has been completed for stainless steel. Against the backdrop that the industry's profit trend remained stable in the second half of the year, the company's performance is expected to continue to improve. The company's 2016 and 2017 EPS are expected to be 0.11 yuan and 0.05 yuan respectively, maintaining the “increase in holdings” rating.