Incident: On August 26, 2015, Jiulian Development released its 2015 semi-annual report. During the reporting period, the company achieved operating income and net profit of 1,868 billion yuan and 91.61 million yuan, respectively, up 0.31% and -9.21% year on year, achieving EPS of 0.28 yuan; of these, 2015 Q2 achieved operating income and net profit of 1,109 million yuan and 67.1 million yuan, respectively, up -6.52% and -13.92% year-on-year, respectively. The company's net profit range from January to September 2015 is expected to be 86.14 million yuan to 129.21 million yuan, an increase of -40% to -10% over the previous year. Comment: The engineering construction and blasting business continues to grow rapidly. In 2015, H1's engineering construction and blasting service business revenue was 1.265 billion yuan, an increase of 26.86% over the previous year. It was the main driving force for the company's revenue growth in the first half of the year. At the same time, the comprehensive gross margin increased by 0.68% to 21.19%. Blasting services are the future development direction of civilian explosives enterprises. The market space is also 4 to 5 times that of explosives. The company is fully qualified and experienced. At the same time, it is located in the west. Demand for infrastructure construction and mine development is strong in the future, and the company's blasting business is expected to continue to benefit. Competition in the explosives market intensified, and gross margin dropped significantly after price liberalization. During the reporting period, the company's explosives revenue fell 27.27% year on year, and gross margin fell 0.88%. In 2015, the country liberalized price controls for civilian blasting equipment, which intensified competition in the industry. Against the backdrop of the country's macroeconomic downturn, the situation of overcapacity in explosives is becoming more apparent. We expect there will be pressure and room for further decline in the gross margin of explosives in the future. With Poly taking the lead, there is plenty of room for imagination for future asset integration. The Poly Group has taken Minbang as one of its five core business segments. The three-year target explosives production capacity is 1 million tons. The determination to expand and strengthen can be seen. Before Poly joined the company, it also acquired Panjiang shares. In the future, these assets will all be incorporated into the company. At that time, the company will account for 10% of the country's explosives production capacity. According to the National Civil Bomb “12th Five-Year Plan” plan, we believe that the company is the most promising listed Minbang company. The first coverage gives a “Recommended” rating. The company's 2015-17 EPS is expected to be 0.63, 0.75, and 0.85 yuan, respectively, corresponding to the current stock price of 24.80 yuan, and PE is 39.4X, 33.1 X, and 29.3X, respectively. Considering strong expectations for future asset injection and industry integration, 40 PE will be given for 16 years, with a target price of 30 yuan. For the first time, coverage will be given a “recommended” rating. Risk warning: 1) macroeconomic downturn, prices fell more than expected due to falling demand for explosives; 2) the pace of asset injection was lower than expected.