Incident: The company released its 2017 annual report. Operating revenue during the reporting period reached 6.33 billion yuan, up 22.3% year on year, achieving net profit of 520 million yuan, corresponding EPS of 0.72 yuan/share, an increase of 16.1% year on year; accrued impairment of large assets reached 770 million yuan, affecting net profit to mother for the current period. At the same time, the company plans to distribute a cash dividend of 2.2 yuan (tax included) for every 10 shares to all shareholders, for a total of 160 million yuan. Coal production and sales declined slightly, and mines under construction progressed steadily. Raw coal production and commercial coal sales in 2017 were 835 and 5.46 million tons respectively, down 6% and 20% year-on-year, mainly due to the transfer of its Longdong coal mine at the end of 2016. Currently, the company has 3 pairs of production mines (Xuzhuang, Kongzhuang, Yaoqiao), with a total production capacity of 8.05 million tons/year, and supporting coal washing plants with a production capacity of 8.2 million tons/year. The mines under construction are located in Xinjiang (106 coal mine, Weizigou mine) and Shanxi (Yuquan mine), with a total production capacity of 5.7 million tons/year, of which 106 coal mine phase I (1.2 million tons/year) is nearing completion. Benefiting from the steady progress of mines under construction, the company's raw coal production is expected to reach 835, 935, and 10.85 million tons in 2018-2020, up 6.3%, 12.0%, and 16.0% year-on-year. With significant depreciation, the coal sector is expected to go light in the future. It is estimated that the profit and loss of the coal sector in 2017 was about 590 million yuan, including 740 million yuan in asset impairment losses such as mining rights, projects under construction, and non-current assets. If impairment losses are not included, the real profit and loss of the coal sector can reach 1.15 billion yuan, corresponding to a net profit of 210 yuan/ton of coal. In the long run, supply in the coal industry continues to be tight, and coal prices are expected to remain high. Despite a certain rebound in costs, net profit from tons of coal is expected to remain around 200 yuan/ton. The coal sector is expected to contribute 12.3, 14.1, and 16.1 billion yuan in 2018-2020, with year-on-year increases of 56.1%, 14.5%, and 13.8%. Businesses such as electricity and aluminum processing continued to drag down performance. It is estimated that electricity, aluminum processing, and other businesses lost 0.5, 100 million yuan, and 120 million yuan respectively in 2017. Considering that the prices of both electrolytic aluminum and coal are high, seriously reducing the gross profit space of aluminum processing and power businesses, it is expected that the next three years will still greatly drag down the company's performance. Currently, the 2*350,000 kilowatt cogeneration project is still under construction, and it will take some time to start production. Profit prediction and rating: Upgraded to “Prudent Recommendation - A” rating. Profits in the coal business will continue to improve, and after significant depreciation is calculated, it will go into battle even more lightly. As one of China Coal's three coal listing platforms, the company's operations are stable, and there are currently no expectations of integration. The estimated net profit for 2018-2020 is 8.9/10.6/1.2 billion yuan, corresponding EPS of 1.24/1.47/1.67 yuan/share, an increase of 71%/19%/13% over the previous year. Risk warning: sharp correction in coal prices; progress of projects under construction falls short of expectations; calculation of large asset impairment losses