Key investment points: Increase in profit levels and establish a margin of safety at the bottom of valuation. The company is mainly engaged in dry bulk handling business. In 2017, the company's dry bulk throughput reached 226 million tons. It is an important bulk port in the north. Among them, the throughput of goods such as metal ore, soybeans, and wood chips is leading in the country. Benefiting from a recovery in business volume, net profit increased by 109.30% year-on-year in 2017. At the beginning of this year, the company adjusted the depreciation period for some fixed assets, which is expected to increase the total annual profit by 227 million yuan. We estimate that net profit for 2018 is expected to be 616 million yuan, an increase of 67% over the previous year. The corresponding current stock price PE fell to about 16 times, compared to the industry average of 27 times PE, creating a strong margin of safety. The Rizhao Steel Boutique Base was put into operation and is expected to contribute 12 million tons of throughput per year. The first phase of the steel boutique base was successfully put into operation at the end of last year. It is expected that the annual output of steel will be 5 million tons. Based on the 50% iron ore yield, it will bring a throughput of 10 million tons of iron ore in the water. Assuming that Shandong steel consumes 3 million tons, it is conservatively estimated that the total annual contribution to additional steel and iron ore throughput is 12 million. Another 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. West-east coal transportation capacity is getting tighter. Combined with domestic transportation of water and iron ore, the Wazi line volume will open up space for the company's throughput. While the country's coal production continues to increase this year, coal sources are concentrated in the “Three West” regions. Furthermore, the “transit rail” policy has been vigorously promoted, and the demand for “West-East Coal Transport” railway transportation has further increased. The Wazi Railway is one of the four main lines of the West-East Coal Railway. Heavy-duty trains were officially put into operation at the end of 2016. In addition, the two-way heavy rail of the Waili Line will carry heavy responsibilities for internal transportation of iron ore in the long run, with a design capacity of 200 million tons. With the increase in demand for West-East coal transportation and the advancement of domestic iron ore transportation, the Wazhi Line will increase rapidly, and the throughput space will be further opened up. Crude oil and container terminals are developing rapidly and have become important business growth points for the Group. The Rizhao Port Group currently has three 300,000-ton oil terminals, two oil pipelines, and a supporting construction of a 6 million cubic meter storage tank cluster at the rear. The oil handling capacity exceeds 50 million tons. In the long run, the overall annual transit capacity of crude oil will reach more than 100 million tons. It has 4 dedicated container berths, a dedicated container yard of more than 1 million square meters, a container transportation capacity of 6 million TEUs, and is expected to reach 10 million TEUs in the long term. The two businesses grew rapidly. Crude oil and container throughput increased from 12.26% and 11.75% in 2014 to 18.22% and 16.40% in 17H1, becoming a new business growth point for the group company. As the Group's management and operation were adjusted, the Group's business integration expectations were further strengthened and maintained, and the profit forecast was upgraded to a “buy” rating. We maintain our previous detailed estimates of the company's business and performance. It is estimated that the company's net profit for 2018-2020 will be 616 million yuan, 688 million yuan, and 793 million yuan, respectively, and 16 times, 14 times, and 12 times the PE corresponding to the current stock price, respectively. Excluding the SIPG Group, which is heavily influenced by the real estate business and financial business, the industry's average PE in 2018 was 27 times. In the face of increasing certainty about the company's fundamentals, we think that the company's current valuation is low, and there is a conservative view of 40%-50% upward space, which has been upgraded from an “increase in holdings” rating to a “buy” rating. Risk warning: Throughput falls short of expectations.