Core points 1. Optimal interim report performance: In the first half of 2018, operating income was 11.093 billion yuan, up 145% year on year; steel sales volume was 2,945 million tons, up 125% year on year, gross profit of 581 yuan per ton of steel, net profit of 762 million yuan, EBITDA of 1,348 million yuan, an increase of more than 6 times over the previous year, and continuous strengthening of main business capacity; profit per share of 0.09 yuan, net assets per share of 1.96 yuan. Furthermore, total assets fell from 36.5 billion to 24.4 billion, total liabilities fell from 37.6 billion to 6.9 billion, and the balance ratio fell to 28.29%, which is very low in the steel industry. The sharp improvement in profit was mainly due to an 18% year-on-year increase in the company's sales price in the first half of the year, optimization of product structure, internal potential cost reduction, and expansion of production and sales scale. Net operating cash flow decreased significantly year-on-year due to agreed payment of supply, employee debt, and securing the supply of raw materials; 2. Full production, full sales, cost reduction, and high efficiency: 2018H1's iron, steel, and material production was 2.7845 million tons, 3.101 million tons, and 2.966 million tons, respectively, up 79.10%, 89.96%, and 91.57% from the same period last year. Iron and steel production in the first half of the year reached the highest level in the history of Chongqing Iron and Steel in the same period in the history of Chongqing Steel. The overall goal of the company's cost reduction plan is to reduce the cost of tonnes of steel by 200 yuan by the end of the year compared to the first quarter, reaching the average level of the same industry, leading in the southwest region, with a fixed decrease of 58 yuan, 44 yuan, and 83 yuan respectively from April to April. Although the goal has not been fully achieved, the contribution of internal potential cost reduction to overall efficiency is gradually rising; furthermore, the company is mainly committed to achieving high efficiency through management improvement; 3. Based in Chongqing, deeply cultivated in Sichuan and Chongqing, radiating southwest China: the southwest region is one of the few places with a net inflow of steel. Judging from sales revenue in the first half of the year, more than 90% came from the southwest region. In the second quarter, the market share of the company's products in Chongqing had already increased to more than 80%, and the market share in Chengdu had increased to more than 60%. In the first half of the year, the company's goals based in Chongqing were basically achieved, and the market position changed from “following” to “leading”. The second half of the year includes efforts to further expand the Yungui market by cultivating Sichuan and Chongqing and spreading southwest China; 4. Improvement of production and operation: In order to reduce logistics constraints on foreign resources, the company is strengthening cooperation with local resources. At the end of June, the share of local resources increased from 50% at the beginning of the year to 57.57%. Among them, lean coal and 1/3 of coking coal have all been procured locally. Furthermore, in terms of product sales, the company has increased its direct supply ratio. The direct supply ratio for main products has reached more than 70%, and the direct supply ratio for medium and heavy plates has reached more than 40%. It will continue to set up direct sales platforms in the future. Other production and operation data: the average ratio of scrap steel is 17%; the grade of iron ore into the furnace has increased to 57%; the environmental operation cost of tons of steel has increased to 105 yuan. There are still several projects planned in the future; 5. Plans and forecasts for the second half of the year: The company believes that the overall situation of the steel industry in the first half of the year was a basic balance between supply and demand, and that the production efficiency of enterprises continued to improve. We believe that steel prices are still expected to fluctuate in a relatively high range in the second half of the year. Against this background, the company's iron and steel production and revenue are expected to be higher than planned at the beginning of the year. The company's ultimate vision is to become the most competitive steel enterprise in southwest China, a leader in the green and friendly transformation and upgrading of inland steel mills, and ultimately achieve strong heavy steel, beautiful heavy steel, and attractive heavy steel.