Key investment points: An important bulk port in the north with a rich land transport network. The Rizhao Port Group has two major port areas, Ishimusu and Arashiyama, with a throughput of 360 million tons in 2017, ranking 6th among northern coastal ports. Among them, dry bulk throughput totaled 226 million tons, accounting for more than 60%. The throughput of goods such as metal ore, soybeans, and wood chips is leading in the country. Rizhao Port is an important hub for the “Belt and Road” and the eastern bridgehead of the New Asia-Europe Continental Bridge. Internally, it is backed by the vast economic hinterland of central and southern Lu. At the same time, the sea area is concave, close to the central and western regions, and is facing strong demand for raw materials. At present, the company has integrated shipping with various modes of transportation such as railways, highways, pipelines, and belts to form a comprehensive transportation pattern with large entry and exit, and convenient collection and evacuation. The Wazi Railway continues to contribute to the increase in coal volume, and it is expected to carry iron ore in the long run. At the end of 2016, the Wazi Railway realized the operation of heavy-duty trains reaching the port. In January of this year, it began normalizing coal transportation operations, which will divert the freight volume carried by the traditional Daqin Line and the Shuohuang Line to West Coal East. Looking at the recent past, sewage coal has brought new growth to the company's coal business. The number of coal arriving in Hong Kong in Q1 has reached 1.56 million tons, and is expected to reach 4 million tons throughout the year. From a long-term perspective, since the Wari Line is designed as a two-way heavy-duty railway, connecting several major north-south railway lines, it will help spread the port's bulk goods to the whole country through the railway network. Sheung Shui iron ore is expected to be transported to central and western steel companies through the Wari Line, bringing continuous business growth. The Rizhao Steel Boutique Base was put into operation and is expected to contribute 10 million tons of throughput per year. The first phase of the Rizhao Steel Boutique Base was successfully put into operation at the end of last year. The commissioning of the steel boutique base will drive the growth of iron ore in Shangshui, coking coal in Shangshui, and steel in sewage, and is expected to drive throughput of about 10 million tons throughout the year. The other phase, Phase 2, will be put into operation in the first half of next year. At the same time, the 400,000-ton joint venture terminal will be put into operation at the same time, which will become a new growth point for the company's business volume. Depreciation is extended, profit levels are raised, and a margin of safety is built. The company will adopt future applicable laws to adjust the depreciation period of some types of fixed assets. The depreciation period for fixed assets such as port storage facilities, handling machinery and equipment has been extended by 8-20 years. The company expects to increase the total profit on the consolidated statements for the full year by about 227 million yuan, accounting for 37.82% of the total profit for 2017, which will lead to a further increase in surface profit and reduce valuation and establish a margin of safety. Raise the profit forecast and maintain the “increase in holdings” rating. We expect the company's net profit in 2018-2020 to be 616 million yuan, 688 million yuan, and 793 million yuan (original forecast of 613 million yuan, 679 million yuan, 779 million yuan), and the corresponding current stock price PE is 20 times, 18 times, and 15 times respectively. After excluding the SIPG Group, which has a lot of influence in the real estate business and financial business, the industry average PE in 2018 is 27 times, so we believe that the company's current valuation is still low and maintains a “increased holding” rating. Risk warning: Throughput falls short of expectations.