1. Chongqing Steel: Reorganization and rebirth, based in the southwest, to build a leading regional plate steel company. The largest shareholder of Chongqing Iron and Steel is Chongqing Changshou Steel Co., Ltd., with a shareholding ratio of 23.51%. Chongqing Changshou Steel Co., Ltd. is controlled by Siyuanhe (Shanghai) Steel Industry Equity Investment Fund (75% shareholding ratio) and Chongqing Strategic Emerging Industry Equity Investment Fund (25% shareholding ratio). Among them, the Siyuanhe (Shanghai) Steel Industry Equity Investment Fund is the first steel industry restructuring fund in China, jointly formed by Huabao Investment Co., Ltd., controlled by China Baowu Steel Group Co., Ltd., and WL Ross of the United States, the China-US Green Fund, and China Merchants Financial Group. As of December 31, 2017, all asset dispositions involved in the restructuring plan have been settled. Chongqing Iron and Steel currently has a crude steel production capacity of 8.4 million tons, of which hot-rolled coils and medium and heavy plates account for more than 82% of production and 72% of revenue. The company is deeply involved in the Chongqing regional market as its strategic fulcrum, and product sales are mainly in the southwest regional market. The southwest region accounted for nearly 94% of revenue in 2017. 2. Main steel industry: Adhering to the southwest regional market, full production and sales, and cost leading strategies to help the main steel industry improve quality and efficiency in sales on the regional side. The company is deeply involved in Chongqing, is based in Sichuan and Chongqing, and radiates southwest China. Adhering to the regional market, brands and international certifications strengthen the company's competitive advantage. In terms of market demand, southwest regions such as Chongqing, Sichuan, Yunnan, and Guizhou are important heavy industry bases in China, effectively driving up the company's board demand; in terms of market supply, with the exception of Pangang, key steel companies in the southwest region mainly produce building materials, which does not put a lot of competitive pressure on the company's board sales within this region; in terms of improving quality and efficiency, the company vigorously implemented a strategy of full production and cost leadership to improve production efficiency and achieve comprehensive cost reduction, achieving a comprehensive cost reduction of about 256 million yuan in the first quarter of 2018. By achieving a strategy of full production, full sales, and cost leadership, the company's profitability has been greatly improved. In the first quarter of 2018, the company achieved net profit of 350 million yuan, a significant increase of 946 million yuan over the first quarter of 2017. 3. Financial analysis: The steel industry continues to be prosperous. After asset restructuring resumed the company's operating capacity and asset restructuring, the company's operating capacity recovered to a large extent in 2017. In 2017, the company's profitability increased significantly year on year, the cost ratio for the period fell across the board year on year, and the operating capacity improved markedly. The company's balance ratio fell sharply to 32.82% in 2017, and its ability to repay debt increased markedly. 4. Profit forecast and investment suggestions: We believe that the company's full-year commercial billet sales volume in 2018 is expected to reach the target value of 5.72 million tons. Steel prices may remain high throughout the year, and the company's gross margin is roughly comparable to the level of the first quarter of '18. Based on the above assumptions, we expect the 2018-2020 EPS to be 0.14 yuan, 0.15 yuan, and 0.16 yuan, which corresponds to the closing price of May 4, 2018, and the 2018-2020 PE is 15.22X, 14.08X, 13.36X; Chongqing Iron and Steel's business conditions quickly recovered after asset restructuring. The company is based in the southwest, improving quality and efficiency, and building a leading plate company in the southwest region. First coverage, giving it a “prudent increase in holdings” rating. 5. Risk warning: The macroeconomy has declined sharply; steel prices and major raw material prices have fluctuated greatly; and the implementation process of the company's full production and sales, leading cost strategy has fallen short of expectations.