Event description The company announced its performance forecast for the first half of 2018. The company expects to achieve net profit attributable to shareholders of listed companies of 900 million yuan to 1,050 billion yuan in the first half of the year, an increase of 3141.72% to 3682.01% over the previous year. According to this calculation, the company achieved net profit attributable to shareholders of listed companies of 771 million yuan to 921 million yuan in the second quarter, an increase of 237.70% to 303.39% over the previous year, an increase of 498.79% to 615.25% over the previous year. According to the latest share capital calculation, the company's EPS for the second quarter was 0.32 yuan to 0.38 yuan, and the first quarter EPS was 0.05 yuan. Incidents commented that production increased due to the lifting of production restrictions and suppression, and performance in the 2nd quarter improved dramatically: the company's profit in the 2nd quarter increased month-on-month. If calculated according to the average value of the performance forecast range, the profit for a single quarter was about 846 million yuan, second only to the 3rd quarter of 2017, the second highest in history. The company's main product is plate, and medium and heavy plates account for a relatively high share. The sharp increase in performance in the second quarter was mainly due to the double increase in production and profit per ton of steel. On the one hand, due to the end of environmental protection production restrictions during the heating season, the company's steel production rebounded sharply in the second quarter. According to the China Steel Association's seasonal production data estimates (the June seasonal production, which has not yet been published, was replaced by May data), the company's steel production in the second quarter increased sharply by about 45.17% month-on-month. On the other hand, plate prices in the second quarter rose 1.57% month-on-month, with medium and heavy board rising by 6.29%; at the same time, raw material prices weakened month-on-month. Among them, the average price of mineral ore fell by 12.46%, the average price of coke fell 3.10%, and the average price of scrap fell 3.04%, which ultimately led to an overall increase in the industry's profit in the second quarter. Among them, the average gross profit of hot rolled and medium steel lags behind January's average gross profit of about 269 yuan and 414 yuan, respectively. Furthermore, as time coincided, production gradually stabilized and downstream automaker certification progressed gradually after the company's cold rolling business was put into operation, or contributed to a certain increase in performance. Production and marketing are combined to boost environmental investment, and the company is expected to reinvigorate: the company's profitability was relatively weak in the past, mainly due to rapid expansion of production capacity against the trend, limited product structure, and continued environmental production restrictions. However, the situation has improved. On the one hand, medium and heavy board is booming due to strong production and sales of downstream construction machinery, and the gradual improvement of cold rolling production and certification has enabled the company's variety structure weaknesses to be made up for or even turned into advantages. On the other hand, the company has increased its investment in environmental protection. Currently, the company's environmental protection level is at the forefront of the industry. It is in line with the encouragement direction of the latest production limit policy of the Henan government, which is expected to reduce the probability of the company's subsequent production limit. At the same time, the restart of the company's electric arc furnace with a production capacity of 1 million tons at the end of 17 will also effectively hedge the impact of production restrictions on the company's production. The company's 2018 and 2019 EPS are expected to be 1.07 yuan and 1.26 yuan respectively, maintaining the “buy” rating. Risk warning: 1. Demand falls short of expectations; 2. Subsequent production restrictions were too large.