Key events in the report describe Xining Special Steel's release of its 2016 quarterly report. During the reporting period, the company achieved revenue of 1,751 billion yuan, up 49.74% year on year; realized operating costs of 1,767 billion yuan, up 78.63% year on year; realized net profit attributable to parent company owners - 255 million yuan, compared to -0.11 yuan in the same period last year; achieved EPS-0.34 yuan in the first quarter, -0.11 yuan in the same period last year, and -1.50 yuan in the fourth quarter of 2015. Incident review: Product prices rebounded slowly, and first-quarter results declined year-on-year: benefiting from a phased recovery, the company's subsidiary's product sales volume increased compared to the same period last year, causing a sharp rise of 49.74% year on year. Although the sales prices of the company's main products, steel, iron powder, and coke all rebounded, year-on-year, the recovery was limited. Compared with still being low, the comprehensive steel price index fell 18.19% year on year. Mineral prices fell 21.42% year on year, and the average price of secondary metallurgical coke fell 24.40% year on year. As a result, there was an inversion between current operating costs and operating income, which dragged down the degree of year-on-year recovery in gross profit. The company's gross margin decreased by 16.32 percentage points year on year, and gross profit increased by 196 million year on year. This is the main reason for the increase in year-on-year losses in the first quarter results. In addition, the company's three expenses increased by 0.14 billion yuan year on year in the first quarter, which also played a role in the year-on-year decline in performance. On a month-on-month basis, the recovery in the market led to a rebound in product prices, compounded by an increase in sales. As a result, gross margin rebounded sharply month-on-month, causing gross profit to increase by 407 million month-on-month. At the same time, asset impairment losses decreased by 450 million yuan month-on-month due to inventory price reduction preparations, and decreased by 450 million yuan month-on-month, further boosting the month-on-month improvement in performance in the first quarter. Ultimately, the company's profit for the first quarter increased by 857 million yuan month-on-month. Seek industrial upgrading and look forward to new “Belt and Road” opportunities: in the main business, the company is actively promoting technical improvement projects, and the product structure is expected to be upgraded. At the same time, the company is also actively exploring other business areas and seeking a diversified business pattern. In the short term, the performance is expected to be further supported under the difficult circumstances of the main business decline. Furthermore, the company is located in an important area of the “Belt and Road”, and future performance may benefit from the development opportunities brought by the “Belt and Road”. In addition, the company's project to increase the amount of 5.782 billion yuan to repay bank loans has been approved. This will help reduce the company's financial expenses and enhance the company's ability to withstand the harsh winter of the industry. The company's EPS is expected to be 0.05 yuan and 0.14 yuan respectively in 2016 and 2017, maintaining the “gain” rating.