The company released its 2017 semi-annual report. In the first half of 2017, the company achieved revenue of 2.54 billion yuan, an increase of 81.2% over the previous year; realized net profit of 180 million yuan; and EPS of 0.09 yuan/share, in line with market expectations. Due to the vertical effects of upstream and downstream and the increase in the gross profit of aluminum recycling, the company's performance soared. Metalico helps upstream and downstream vertical integration. Metalico is an American subsidiary acquired by the company on July 1, 2016. It has three metal scrap crushing lines that process about 150,000 scrap cars a year, accounting for about 40% of revenue. Dismantling of end-of-life vehicles is the main source of its metal waste. This merger and acquisition has achieved vertical integration of the company from the front-end recycling process to the back-end deep processing process, extending the company's business upstream and downstream, and further enhancing the cost advantages of the company's raw materials. In the first half of the year, the synergy of upstream and downstream vertical integration was initially evident. At the same time, Metalico has begun to achieve revenue and profit growth, and the company's performance has risen sharply. The price difference for scrap aluminum has increased, and gross margin has continued to rise. The main source of profit in the company's aluminum business is the price difference between scrap aluminum and aluminum ingots, commonly known as the difference between scrap aluminum. In recent years, the supply of scrap aluminum and the continuous rise in aluminum prices have continued to widen the price gap of scrap aluminum. The company's gross margin level has continued to increase, and its performance has soared. The future aluminum recycling market is expected to be blessed: on the one hand, as a large number of cars in China enter the scrap period, China is about to usher in a peak scrap recycling period. At that time, the growth rate of domestic scrap aluminum supply should be expected to increase from 10% to 15%, further increasing the supply of raw materials; on the other hand, aluminum prices are expected to usher in a bull market with the advancement of supply-side reforms, further increasing the gross profit of scrap recycling. Yiqiu Resources, as the largest scrap aluminum recycling company in China, will fully enjoy the increase in profits brought about by this process. Considering that the company's current 600,000 tons of production capacity and interest rates are only nearly half of the aluminum scrap company solved, once the company uses only about half of its current 600,000 tons of aluminum scrap Channel issues, Flexibility is worth looking forward to. Enjoy the advantages of low-priced scrap aluminum from overseas and high-priced domestic products. Seven types of scrap aluminum are among the foreign garbage that the government has banned from importing at this time. My nonferrous metals network estimates that they account for about 50% of the entire scrap, equivalent to 1 million tons. Once implemented, it will trigger a decline in overseas scrap prices and an increase in the domestic price of scrap aluminum, or aluminum ingots. As a company with US recycling and dismantling qualifications, the company will enjoy the advantages of low-cost overseas scrap aluminum and domestic high-priced domestic products. In the future, Yiqiu Resources will also contribute a considerable share to the supply of seven types of scrap aluminum. The explosion of the 100 billion automobile dismantling market is just around the corner. As of mid-2017, the number of cars owned in China reached 205 million, and in 2020 it will exceed 270 million. Based on the recycling rate of 4%, the annual number of scrapped cars will reach 10.8 million. Considering only the recycling value of used materials, the market space of the end-of-life car industry by 2020 is about 35 billion yuan. Profit forecast and investment recommendations: We forecast that the company's net profit for 2017-2019 was 467 million, 606 million and 705 million yuan respectively, and EPS was 0.23 yuan, 0.30 yuan and 0.35 yuan respectively. Corresponding to the closing price on August 14, dynamic PE was 18 times, 14 times and 12 times, respectively. Yiqiu Resources has high performance elasticity and low valuation compared to aluminum prices, and will enjoy a ban on overseas scrap imports and be upgraded to a “buy” rating. Risk warning: Aluminum prices are falling, and national policies such as car dismantling and aluminum scrap have changed