Key points of the report describe the events of Xining Special Steel released its 2015 three-quarter report. In the first three quarters, the company achieved operating income of 3.760 billion yuan, a year-on-year decrease of 14.28%; operating costs of 3.441 billion yuan, a year-on-year decrease of 3.17%; and realized net profit attributable to shareholders of listed companies of -507 million yuan, achieving EPS-0.69 yuan, and EPS-0.32 yuan for the same period last year. Among them, the company achieved operating income of 1,389 billion yuan in the third quarter, a year-on-year decrease of 7.20%, and a year-on-year growth rate of -21.17% in the second quarter; operating costs of 1,388 billion yuan, a year-on-year increase of 15.95%, and a year-on-year growth rate of -12.75% in the second quarter; net profit attributable to shareholders of listed companies in the third quarter was 272 million yuan, and the same period last year was -0.37 million yuan; and EPS in the second quarter was -0.21 yuan. The incident commented on the downturn in the entire industry chain, and performance losses in the third quarter intensified: The company's business mainly includes the three major fields of steel, iron ore and coal. Constrained by the downturn in the entire steel industry chain, the company's three main businesses may all show a sharp decline in volume and price, which ultimately led to a 7.20% year-on-year decline in revenue in the 3rd quarter, and comprehensive gross margin fell significantly by 19.96 percentage points to 0.04%, which became the main factor in the increase in the company's performance loss in the 3rd quarter: 1) The downturn in the industry boom combined with the lack of characteristics of the company's special steel products led to a 27.60% year-on-year decline in the company's special steel price index in the 3rd quarter. The profit situation in the steel business should have deteriorated further; 2) Affected by weak downstream steel demand, the company's other two major products, iron powder and coke, also suffered a sharp decline in volume and price. Among them, iron ore prices fell 31.12% year on year in the third quarter, and the price of grade 2 metallurgical coke in Taiyuan fell 24.50% year on year, which also led to a continued decline in the company's performance; 3) Although the company's three expenses and asset impairment losses decreased year over year, it is still difficult to reverse the loss of performance. On a month-on-month basis, the company's operating income still increased 15.54% in the face of a significant decline in gross margin. Considering that the company's inventory continued to rise in the third quarter, the increase in the company's revenue in the third quarter may be due to an increase in revenue from non-steel businesses such as real estate, but this is yet to be further confirmed. However, even that did not change the month-on-month decline in the company's performance. Special steel's main business structure has benefited from the “Belt and Road”: The future focus of the company's main business is, on the one hand, that the product structure will be upgraded after the completion of the technical reform project. On the other hand, the regional advantage of being located in an important area of the “Belt and Road” will help the company's performance recover. In addition to its main business, the company's acquisition of real estate business and other diversified operations will ease the current decline in the company's steel business to a certain extent. The company's 2015 and 2016 EPS are expected to be -0.83 yuan and 0.01 yuan respectively, maintaining the “increase in holdings” rating.