Event description The company released its 2015 three-quarter report today. In the first three quarters, the company achieved operating income of 1.159 billion yuan, a year-on-year decrease of 15.86%; realized net profit attributable to the parent company of 91 million yuan, an increase of 66.55% over the previous year; and achieved an EPS of 0.07 yuan. According to this estimate, the company achieved net profit attributable to the parent company in the third quarter, a year-on-year decrease of 70.27%; in the third quarter, it achieved an EPS of 0.00 yuan, and in the second quarter, an EPS of 0.08 yuan. Incident review The revenue for the 3rd quarter declined both month-on-month, mainly due to weak product prices. In the first three quarters, the company achieved revenue of 1.159 billion yuan, a year-on-year decrease of 15.86%, of which revenue for the third quarter was 361 million yuan, a year-on-year decrease of 23.03%, a year-on-year decrease of 18.35%. The coal and coking market continued to be sluggish in the third quarter. The average price of 1/3 of the coking coal market in Qitaihe, where the company's main mine is located, fell 28 yuan month-on-month, and second-grade metallurgical coke fell about 63 yuan month-on-month. The average prices of other chemical products, such as crude methanol, benzene, etc., also fell in various prices. Weak prices of major products had a certain impact on revenue. The cost side was well controlled, and gross margin rebounded month-on-month in the 3rd quarter. In the first three quarters, the company achieved operating costs of 975 million yuan, a year-on-year decrease of 6.76%, of which the operating cost for the third quarter was 289 million yuan, a year-on-year decrease of 18.66%, and a decrease of 27.34% over the previous year. The gross profit margin for the third quarter was 19.81%, down 4.31 percentage points from the previous year, but up 9.92 percentage points from the second quarter, mainly due to better control on the cost side. The gross profit for the third quarter rose 28 million yuan to 72 million yuan over the previous quarter, an increase of 63.57%. Expenses for the period declined year on year, and sales and financial expenses were better controlled. The company's expenses for the third quarter totaled 83 million yuan, a year-on-year decrease of 27.21%. Among them, management expenses increased by 2.47% year on year, and sales and financial expenses decreased by 38.47% and 43.00%, respectively. The large decline in financial expenses was mainly due to lower interest rates on bank loans and lower interest expenses on bonds. After deducting losses in the third quarter, losses were reduced month-on-month. The company's net profit for the 3rd quarter was 0.06 billion yuan, down 94.31% from the previous month. The weaker month-on-month performance stemmed from the high non-recurring profit and loss in the second quarter (mainly due to the merger of Longmei and Tiantai). In the first quarter, after deducting losses of 60 million yuan, compared to a loss of 0.06 billion yuan, mainly due to strong cost control. There are broad prospects for transforming new materials. Keep an eye on the progress of graphene projects and maintain a “buy” rating. The comprehensive cost of the company's circular economy industrial chain is low, and its profitability is among the highest in the industry. The company is actively transforming, and in addition to upgrading its traditional business, it has also broken out of the coal coking industry chain and entered new materials. The technology for the company's 100 tons/year graphene project is relatively mature. It is expected to be put into operation by the end of next year. Subsequent graphene derivatives technology research and development is worth looking forward to. We forecast that the company's EPS (after dilution) in 15-17 will be 0.07, 0.09, and 0.11 yuan, respectively, and the corresponding PE will be 98, 73, and 60 times, respectively, maintaining the “buy” rating.