Investment highlights: Events/news: The company released a semi-annual report. During the reporting period, it achieved operating income of 2,563 billion yuan, an increase of 9.78% over the previous year; net profit of 355 million yuan, an increase of 56.28% over the previous year; and finally achieved basic earnings per share of 0.11 yuan. The weighted average ROE was 3.28%, an increase of 1.1 percentage points over the previous year. The performance was basically in line with expectations. Strong growth in metal ore and coal led to a 6.62% year-on-year increase in throughput. The cargo throughput volume completed during the reporting period was 12.169 million tons, an increase of 6.62% over the previous year. Among them, foreign trade throughput was 10.02 million tons, up 5.93% year on year; domestic trade throughput was 21.67 million tons, up 9.92% year on year. Among the main goods, the throughput of metal ore, coal and products, which accounted for the highest share was 76.08 million and 20.59 million tons, respectively, up 9.14% and 22.92% year-on-year respectively; timber and cement goods were driven by the increase in downstream demand, with throughput increases of 12.66% and 31.78%, respectively. Affected by trade frictions between China and the US, the company's consumption of food, steel and other goods decreased by 16.17% and 27.82% year-on-year respectively. Due to the small actual throughput base, the impact on the company as a whole was not significant. The first phase of Shangang Steel's boutique base was put into production and increased in volume, compounded by increased demand in the hinterland, and accelerated the upward trend in metal ore throughput. Metal ore accounts for more than 60% of the company's products. We have reduced that the metal ore throughput in the first two quarters increased by 7.35% and 11.01% year-on-year, respectively. The marginal acceleration trend is obvious. The factors that will drive the growth of metal ore in the future are as follows: First, the production capacity of Shangang Steel's boutique base will gradually increase, driving the transportation demand for iron ore in water and finished steel products in sewage; second, infrastructure is expected to enter a boom cycle in the second half of the year, driving an increase in the transportation volume of goods such as ore, coal, timber, and cement in the hinterland. In addition, phase 1 and phase 2 of the boutique base will be put into operation in the first half of next year. The 400,000-ton joint venture terminal in Sheung Shui will be put into operation at the same time, and the disposal of the northern and eastern revetments of the finished product terminals in Xiashui will be completed. It is estimated that 40,000 ton berths will be completed by the end of the year, which will contribute new cargo throughput to the company. The progress of the “transit to rail” policy has exceeded expectations, and coal transportation on the Wazi Railway has gradually increased in volume to open up space for traffic. The State Council has held several meetings to promote the “transit to rail” policy, requiring coal collection ports in major ports in Shandong to switch to railways or waterways before the end of the year; before the 2020 heating season, in principle, bulk goods such as ore and coke will be mainly transported by rail or waterway. Rizhao Port is a sewer port for the Wari Line. More than 330 thousand tons of trains were handled and unloaded during the reporting period, and about 2.5 million tons of coal collection was completed. The railway collection and evacuation system within the port was basically completed, and 4 new “waterless ports” were set up at the same time to attract supplies. As the second half of the year enters the policy window period, the company is expected to further seize demand for coal collection ports in the Bohai Rim region, promote internal transportation of iron ore, and open up traffic space. Raise the profit forecast and maintain the “buy” rating. Considering the accelerated growth in throughput brought about by the public transit rail policy, we raised our profit forecast. The estimated net profit for 2018-2020 was 625 million yuan, 778 million yuan, and 1,271 million yuan (original forecast of 616 million yuan, 688 million yuan, 793 million yuan), respectively. The corresponding current stock price PE was 16 times, 12 times, and 8 times. Compared with the industry average valuation, the company's valuation was low and maintained a “buy” rating. Risk warning: The online volume of Wazhi falls short of forecasts, and the Shangang Steel base has not been put into operation as scheduled.