On April 10, 2018, the current A-Stream Incident Company announced the “2018 First Quarter Results Advance Notice”. The company expects net profit attributable to shareholders of listed companies from January to March 2018 to increase by 88 million yuan to 255 million yuan, an increase of about 53% year on year; it is expected that net profit attributable to shareholders of listed companies from January to March 2018 will increase by 109 million yuan over the same period last year, reaching 256 million yuan, an increase of about 74% year on year. Endogenous dynamics were strengthened, and profit levels remained stable in the first quarter of 2018. Due to the low season for the steel industry, steel social inventories were high, and steel prices declined month-on-month, but the company's profit level remained stable. Thanks to the company strengthening internal management and enhancing endogenous motivation, under the principle of prioritizing efficiency, it continued to optimize the blast furnace raw fuel structure, optimize production lines and product structure, and optimize marketing management, with obvious cost reduction and efficiency. In 2018, in order to prevent the resurgence of “ground steel”, the complete ban on “ground steel” was strengthened, and the country continued to push for supply-side reforms to reduce excess production capacity in the steel industry, further improvements in the relationship between supply and demand are expected to move the steel price center upward. As the relationship between supply and demand is further optimized and steel prices steadily rise, the company's profit is likely to maintain a steady upward trend. Inventories have declined rapidly, and demand has accelerated. The company's main product is construction steel. Starting in October 2017, the downstream industry began to enter a low season, and inventories grew rapidly. Combined with the impact of environmental production restrictions in the northern region, downstream construction sites stopped, further limiting the release of downstream demand. Under these circumstances, the company maintained a good level of profit in the first quarter. However, at present, social stocks of steel have declined rapidly, steel prices have steadily rebounded, and demand has begun to be released at an accelerated pace. Combined with the completion of the company's maintenance in the first quarter, the company's profit is expected to increase further in the second quarter. There is a tight balance between supply and demand for long materials, and strong demand before the heating season supports the rise in product prices. In the first half of 2017, the country launched a campaign to crack down on “ground steel”. Affected by the “ground steel” clearance, starting last year, there was a tight balance between supply and demand for long materials. Considering that the country still strictly investigates “ground steel” in 2018 and plans to reduce production capacity by another 30 million tons this year, supply and demand for long materials will continue to be in a tight balance, supporting the rise in the company's product prices. Environmental production restrictions for the 2018 heating season are likely to continue to be implemented, affecting downstream construction sites. Therefore, before the heating season, demand is expected to be released centrally and remain strong, further supporting the company's rising product prices, and performance is expected to grow rapidly. The company's operations are stable. The “buy” rating is estimated to be the company's 2017-2019 EPS of 0.47 yuan, 0.96 yuan, and 1.06 yuan, and the corresponding PE is 8.00 times, 3.95 times, and 3.60 times. Considering the large overall pullback in the steel industry, due to prudential considerations, the target price was lowered to 6 yuan to maintain the purchase rating. Risk warning: macroeconomic and downstream demand falls short of expectations, corporate governance and other risks.