The main points of the report are that the continued low market value of Anyang Steel by tonnes of steel stems from low profit expectations as Anyang Steel, which has a production capacity of nearly 10 million tons, of which 65% is plate. Among listed steel companies, the market value of tonnes of steel has always been low. Up to no**** Steel has a market value of 1202 yuan/ton of steel, ranking second to last in the industry. From a dynamic point of view, the market value of tons of steel can be simply understood as the market's expected result of discounting the future cash flow generated by the target steel mill unit's production capacity. Obviously, Anyang Iron and Steel continues to have a relatively low market value per ton of steel, which should be related to the market's lower profitability expectations. Contrary expansion+environmentally friendly production limits have dragged down Anyang's past profitability. Anyang Steel's past profits continued to be relatively weak, mainly due to the company's rapid expansion of production capacity, limited product structure, and continued environmental production restrictions. Based on DuPont's analysis, specifically: 1) From 2011 to 2015, the company's cumulative increase in production reached about 28%, ranking among the top listed steel companies. The rapid expansion led to a high leverage ratio of the company, which increased the company's financial burden, while production and sales had to be reconciled after the new production capacity was launched, which also dragged down the company's past asset turnover efficiency. 2) The downstream shipbuilding sector is sluggish, and product certification has yet to be completed after high-end cold rolling is put into production. Medium and heavy plates, which account for 26% of production capacity, and 12% of cold rolling have continued to drag down the company's gross profit margin in the past. 3) Due to its location on the Beijing-Tianjin-Hebei region, under environmental pressure, the company has been significantly affected by environmental production restrictions since 2016. In 2016 and 2017, production fell continuously by 6.29% and 6.40%, with a cumulative decline of about 1.06 million tons. The extent of impact was most significant among listed steel companies, which has become the core factor that has dragged down the company's business performance in recent years. Stable production and marketing plus environmental advantages, Anyang's future performance is worth looking forward to. With the gradual integration of production and marketing, further optimization of asset and product structures, and efforts to reduce the probability of production limits, etc., the company's profitability has improved and is expected to continue to return to or even exceed the industry average. On the one hand, production and sales of new construction projects have gradually stabilized over time, speeding up the company's asset turnover efficiency, while medium and heavy boards are booming due to strong production and sales of downstream construction machinery, and the gradual completion of cold rolling certification has also enabled the company's variety structure weaknesses to be made up for or even turned into advantages. On the other hand, promoting environmental protection has enabled the company's current environmental protection level to rank among the highest in the industry. It is in line with the principle of not limiting production in line with the Henan government's latest production limit policy. It is expected that the probability of the company's subsequent production limit will be reduced. The restart of the electric arc furnace with a production capacity of 1 million tons will also effectively hedge against the impact of the production limit on the company's output. From a long-term perspective, the company plans to replace part of its production capacity at various locations, which is expected to optimize the company's region and product structure in the long term, thus enabling the company to benefit more fully from the domestic market in Henan Province. Investment: Undervaluation and high flexibility. It is expected that the market value of tons of steel will return to profitability and gradually reach the industry average, which is expected to bring about a corresponding return to the market value of Anyang Iron and Steel tons of steel. The company's current market value of tonnes of steel is still 92% different from the industry average of 2,313 yuan/ton, and there is significant room for future repairs. It is estimated that the company's EPS in 2018 and 2019 will be 1.07 yuan and 1.26 yuan respectively, and the corresponding PE will be 4.11 times and 3.49 times, respectively. For the first time, it will be given a “buy” rating. Risk warning: 1. The company experienced environmental production restrictions that exceeded expectations; 2. There is a possibility that the supply elasticity of the industry will increase significantly.