Key investment points Profit continued to improve in 2017, with asset impairment losses increasing by 344.15% year over year. The company's operating income in 2017 was 6.334 billion yuan, up 22.51% year on year, and net profit was 519 million yuan, up 15.08% year on year. The company achieved profit for the second year in a row. The company achieved profit for the second year in a row. EPS was 0.72 yuan, and net profit after deduction was 514 million yuan. The performance was slightly higher than our expectations, but far below the unanimous expectations of the market, mainly due to the company's sharp increase in asset impairment losses of 768 million yuan (up 344.15% year on year), which affected net profit of 460 million yuan. The profit distribution plan is to distribute 0.22 yuan per share (tax included), for a total distribution of 159 million yuan. Raw coal production fell by 6.33%, coal washing prices increased by 55.71%, and the coal sector contributed more than 80% to revenue. In 2017, the company produced 7.8569 million tons of raw coal, 14,200 tons of raw coal, and 5.4491 million tons of washed coal, with year-on-year changes of -6.33%/-98.48%/-7.00%, respectively. In 2017, the sales price of the company's raw coal/coal washing was 536.77/914.27 yuan (+50.85%/+55.71% year-on-year, respectively), and the sales cost of tonnes of raw coal/coal washing was 356.24/914.27 yuan (+46.80%/55.71%, respectively). In 2018, the company plans to produce 8.35 million tons of raw coal, 6.32 million tons of commercial coal, 2,725 million kilowatts of power generation, 38,000 tons of aluminum processing, and a total railway freight volume of 12 million tons. The gross profit of the power business shrank by about 28 pct, and the aluminum processing business continued to lose significantly, but increased by about 4.5 pct over the previous year. The company's power generation capacity in 2017 was 2,402 billion kilowatts, up 2.26% year on year. The unit price of electricity was 0.25 yuan/kilowatt-hour (+5.17% year-on-year), but the cost of electricity increased significantly to 0.26 yuan/kilowatt-hour (+44.23% year-on-year). The gross margin of the power business was about -3.83% (a sharp decrease of 28 pct from the previous year), and the operating profit of the power sector was only -23 million yuan, down 28.12% from the previous year, and its contribution to the company's overall operating income also fell from 11% to 9.82%. The aluminum processing business achieved revenue of 379 million yuan, an aluminum processing volume of 241,000 tons (-28.30% year-on-year), and a unit processing cost of 17,600 yuan/ton (+1.29% year-on-year). The gross margin of the aluminum processing business was only -11.88%, and continued to suffer significant losses. Although the company's aluminum processing volume in '17 fell far short of the planned target for that year, the work in 2018 continues to plan to raise the aluminum processing business target to 38,000 tons, an increase of more than 50% compared to 2017 production. We speculate that aluminum prices are improving, and the company's costs will have a scale effect after increasing production, which can reverse the pressure on cash flow to a certain extent. The company's future outlook: coal mining resources in the Xinjiang region need to be developed, and the coal power industry chain is further consolidated. The company has two coal resources in Xinjiang and plans to build 106 coal mines (production capacity 1.8 million tons) and Weizigou coal mine (production capacity 2.4 million tons) respectively. Currently, the two project licenses are still being processed, and it is expected that the company's coal mine production capacity will be increased in the long term. In the power sector, the Datun 2×350MW coal-gangue coal-and-power cogeneration project under construction by the company is currently in the middle of construction. After completion in the future, it is expected that the integrated coal power industry chain will be further strengthened. Risk warning. The price of coal and aluminum products is greatly affected by the market; the aluminum business continues to lose money. Profit forecasts and valuations. Considering that the company is close to coal consumption areas and that asset impairment losses will be drastically reduced in the next few years, we raised the company's 2018 to 2020 EPS forecast to 1.51/1.68/1.66 yuan (the original EPS forecast for 18/19 was 0.69/0.80 yuan). The current price is 12.38 yuan, corresponding to P/E8/7/7x in 18-20. The company was given a target price of 15.10 yuan, corresponding to the 2018 P/E10x, maintaining the “buy” rating.