The interim report had a high turnover, but after deducting a loss in performance. The company's operating income/net profit for the first half of the year was 798/085 million yuan (-12.16%/+145.64% year-on-year), respectively. The sharp increase in performance was mainly due to the consolidation of investment in Tiantai Coal Chemical and the recalculation of the fair value of the original shares. In the first half of the year, the company's EPS was 0.1628 yuan, which was a loss after deductions. EPS was -0.07 yuan, mainly due to the sharp drop in sales prices of coke and chemical products during the reporting period. In the first half of the year, the company plans to use capital reserves to increase share capital by 15 shares for every 10 shares. Losses in the coal coke business dragged down performance, and the cost ratio increased slightly during the period. The company's coal coke/chemical/thermal power products accounted for 69%/23%/8% of revenue in the first half of the year, and gross margin was -2.55%/+57.78%/+13.15% respectively (year-on-year change -6.45/ -9.24/-8.23pct). The coal coke product, which accounted for the largest share of revenue, lost money, dragging down performance. The gross margin of crude benzene and methanol products declined slightly, remaining at a high level of 60% to 90%. In the first half of the year, the company's three cost rates were 22.69% (+3.38 pct year on year), of which the sales expense ratio increased by 2.44 pct year over year, mainly due to the shift in freight settlement from demand to advance payment by the supplier since May. Open up the upstream and downstream graphene industry chains, and the prospects for transformation are promising. Graphene is currently known as the best thermal and conductive material at room temperature, and is widely used in the fields of lithium batteries, photovoltaics, semiconductors, aerospace and military, and touch displays. Since this year, the company has been actively transforming into the graphene industry chain. The upstream has obtained graphite ore prospecting rights; in the future, it will provide graphite raw materials for graphene processing projects; the establishment of a new graphene materials company in the midstream will speed up the implementation of graphene processing projects announced earlier. It is expected that single-layer graphene materials will be produced in the first half of next year; in the downstream application field, the company signed a cooperation agreement with the Tsinghua University Research Institute earlier. The two sides will carry out a number of collaborations in the application of graphene materials for power batteries in the future, and the company will prioritize the application of relevant research results. At present, the company's graphene industry vision has been revealed, and the upstream and downstream industrial chains will be fully opened up, and the prospects for transformation are promising. The Shuangyashan project enhances the profitability of the coal chemical sector and is expected to contribute profits next year. The Shuangyashan project is mainly a 100,000 ton coal-to-methanol to aromatic hydrocarbon project. The original controlling shareholder is Longmei Group. After the company gains a controlling interest, it is expected that the progress of the project will be accelerated. It is expected that the project will be put into operation in the fourth quarter of this year, and it is expected to contribute 40 to 50 million yuan in net profit next year. After the project is put into operation, it will also increase the tar sources for the company's coal tar deep processing project, which will help optimize material balance and promote the circular economy effect. Furthermore, the additional fund-raising project launched at the beginning of this year can produce 300,000 tons of stabilized light hydrocarbons, LPG, and heavy oil products in the future. It is expected that the project will be put into operation after 2 to 3 years. If estimated at the oil price level of 65 US dollars, it is expected to contribute about 100 million yuan in profit. Risk factors: large cost fluctuations; the price of coking products continues to be low, affecting performance growth, etc. Profit forecast, valuation and investment rating: Considering that coke and oil prices remain low, it is expected that the company's recurring performance in the second half of the year will still be poor. We maintain the company's profit forecast of 0.14/0.23/0.27 yuan EPS from 2015 to 2017 (the large increase in the company's performance forecast in 2016 is mainly due to the contribution to the launch of the Shuangyashan project). The current price is 17.34 yuan, and the corresponding P/B is 1.75/1.72/1.69x, respectively. According to the current average valuation level of the industry and considering the catalysts of high turnover, the company was given P/B2.5x in 2015, corresponding to the target price of 22.50 yuan, maintaining the “buy” rating.