Report highlights Event description The company released its 2015 mid-year report today, achieving an EPS of -0.10 yuan, which is in line with expectations. Incidents commented that production and sales in the first half of the year declined year on year, and sales in the second quarter rebounded month on month. The company's commercial coal production in the first half of the year was 8.1864 million tons, a year-on-year decrease of 22.40%, and commercial coal sales were 7.3681 million tons, a year-on-year decrease of 22.94%. In the second quarter, commercial coal production was 3.812 million tons, down 13.32% from the previous month, and commercial coal sales were 3.771 million tons, up 5.24% from the previous month. The basic balance between production and sales in the 2nd quarter. Weak coal prices had a greater impact on cost control, and gross margin declined year over year. Revenue from tons of commercial coal in the first half of the year was 256.15 yuan, down 115.03 yuan, or 30.99%; tons of commercial coal cost was 209.61 yuan, down 17.96% year on year; gross profit per ton of coal was 46.53 yuan, down 69.16 yuan year on year. Cost control did not cover weak coal prices. The gross profit margin of coal mining in the first half of the year was 18.17%, down 13 percentage points year on year, and trade business margin fell 0.46 percentage points to 1.12% year on year. Expenses during the period were well controlled, and the large decline in sales expenses was due to a decrease in freight costs. Total expenses for the first half of the year were 463 million yuan, a year-on-year decrease of 35.29%, of which sales expenses fell 59.05% year-on-year, mainly due to a decrease of 73.49% in transportation expenses and a year-on-year increase of 13 million yuan in financial expenses, an increase of 29 million yuan over the previous year, mainly due to increased loans. Management expenses in the first half of the year fell by 30.30% year over year. Losses from stoppage work in the first half of the year dragged down performance, and most of the increase in losses in the second quarter stemmed from weak coal prices. In the first half of the year, the company spent 85 million yuan on non-operating expenses, of which the Qianqiu coal mine has not yet resumed production, and loss of 83 million yuan in stoppage of work dragged down performance. The company's revenue for the second quarter was 1,121 billion yuan, down 36.06% from the previous month, and gross profit was 119 million yuan, down 50.08% from the previous month. Considering the month-on-month recovery in commercial coal sales in the second quarter, the month-on-month decline in performance was partly due to the month-on-month low coal prices in the second quarter. Net profit attributable for the second quarter was 166 million yuan, and losses increased by 99 million yuan over the previous month. Focus on the progress of the mineral rights dispute and the reform of local state-owned enterprises, and maintain the “increase in holdings” rating. We forecast the company's 2015-2017 EPS to be -0.21, -0.15, and -0.15 yuan, respectively.