Performance summary: The company released its 2018 semi-annual report. During the reporting period, it achieved operating income of 10.085 billion yuan, an increase of 20.59% over the previous year; realized net profit attributable to shareholders of listed companies of 749 million yuan, an increase of 84.85% over the previous year; and net profit attributable to shareholders of listed companies after deduction was 750 million yuan, an increase of 93.12% over the previous year. The EPS for the first half of the year was 0.27 yuan, and the EPS for the single quarter was 0.09 yuan and 0.18 yuan respectively; tonnage steel data: in the first half of the year, the company produced 2,5314 million tons of iron, a year-on-year decrease of 0.62%; 2,6933 million tons of steel, an increase of 4.02%; and 2,6701 million tons of steel, an increase of 4.12% over the previous year. In 2018, the company plans to produce 5.53 million tons of steel, and actually completed 48.7% of the plan in the first half of the year. Combined with the data, the price of tonnes of steel is 3,744 yuan/ton, tonnes of steel cost is 3203 yuan/ton, and gross profit of tonnes of steel is 542 yuan/ton, with year-on-year increases of 514 yuan/ton, 332 yuan/ton, and 182 yuan/ton respectively; performance has continued to improve: since the second quarter, with the gradual release of peak season demand, the rebound in steel prices has clearly repaired the decline in March, and cost-side iron ore prices have maintained a downward trend. Overall industry profits showed a month-on-month improvement trend. According to our estimates, without considering raw material inventories, at the industry level, the gross profit of a ton of rebar steel in the first half of the year and two was 697 yuan and 920 yuan respectively, while the gross profit of a ton of hot-rolled sheet steel was 726 yuan and 968 yuan respectively. The company's products are mainly rod and wire, and it is the largest bar and wire production base in Northeast China. 73% of the steel production capacity in Liaoning Province is plate, and the product structure of large steel companies in Northeast China and North China is also dominated by plates. The company has obvious competitive advantages in regional differentiation. The fundamentals of the industry continued to improve, and the company's profit continued to expand in the second quarter, with a month-on-month increase of 93.7%. During the reporting period, the company's financial expenses fell by 36.2% year on year, mainly due to continued profit, reducing loan and acceptance bill discount expenses; construction projects increased by 31.1% from the beginning of the year, mainly continued investment in the No. 4 blast furnace major renovation and conversion plant function improvement project; profit is expected to remain high: Currently, economic resilience is still there. Against the backdrop of heightened external trade frictions, macroeconomic policies continued to be fine-tuned. After monetary easing, mortgage interest rates in some cities showed signs of loosening recently. Active fiscal policies are expected to stabilize infrastructure growth, but the government is expected to stabilize the growth rate of infrastructure The actual effects of debt restraint are still there It remains to be seen that demand continuity is expected to exceed expectations. Recently, environmental production restrictions have been frequent, and Tangshan City's pollution and emission reduction campaign is underway. Effective contraction on the supply side has stimulated a continuous rise in steel prices since July. Although the recent production restriction actions in Changzhou have had a limited impact on production, the extension of production restrictions is worth paying attention to. The “Three-Year Action Plan to Win the Blue Sky Defense War” clearly expands the key regions from Beijing-Tianjin-Hebei and surrounding areas to the Yangtze River Delta region and the Fenwei Plain. Environmental standards are gradually becoming stricter, and production capacity continues to be limited. In a situation where production capacity and inventory cycles are relatively healthy, the industry's high profitability is expected to continue; investment advice: As the largest bar and wire manufacturer in Northeast China, the company benefits from the basic orientation of the industry and the competitive advantages of regional differentiation, and the trend of improving profit over month is obvious. Against the backdrop of intensifying external trade frictions, macroeconomic policies continue to be fine-tuned, and demand continuity is expected to exceed expectations. Under conditions where production capacity and inventory cycles are relatively healthy, the industry's high profitability is expected to continue, and we will continue to focus on restorative opportunities in the sector. The company's 2018-2020 EPS is expected to be 0.71 yuan, 0.75 yuan and 0.78 yuan respectively, and the corresponding PE is 5.5X, 5.2X and 5.0X respectively, maintaining the “increase in holdings” rating; risk warning: Macroeconomic downturn is expected, and environmental production limits fall short of expectations.