Event: Rizhao Port announces 2018 semi-annual report. In the first half of 2018, Rizhao Port achieved operating income of 2.56 billion yuan, an increase of 9.78% over the previous year; realized net profit of 355 million yuan, an increase of 56.3% over the previous year, and achieved basic earnings per share of 0.11 yuan, an increase of 57.1% over the previous year. Cargo throughput is growing steadily, and the overall impact of trade friction between China and the US is small. In the first half of the year, the company completed a total cargo throughput of 12.169 million tons, an increase of 6.62% over the previous year. Among them, the throughput of metal ore in the first half of the year was 76.08 million tons, a year-on-year growth rate of 9.14%; the throughput of coal and products was 20.59 million tons, an increase of 22.92% over the previous year; timber and cement varieties were driven by the growth in downstream demand, with throughput increases of 12.66% and 31.78% respectively. Affected by trade frictions between China and the US, there has been a certain decline in the throughput of goods such as food and steel. The cargo throughput base is small, which has little impact on overall throughput. Coal transportation on the Wa-Japan Line is gradually increasing, and the “ban on steam transportation to coal collection ports” policy seizes the coke business. In the first half of 2018, Rizhao Port handled more than 330 thousand tons of trains, completed about 2.5 million tons of coal collection, and 10,000 tons of trains arriving in Hong Kong to achieve normalization and scale. Furthermore, Rizhao Port used the implementation of the policy prohibiting the transportation of motor coal from the northern port to vigorously develop the coke business. In the first half of the year, it completed a coke throughput of 5.14 million tons, an increase of 113% over the previous year. Tightly lay out “waterless ports” to increase customer development efforts. In the current situation where the country is vigorously implementing the “transit to rail” policy, Rizhao has actively laid out the railway collection and evacuation system, set up 4 new “waterless ports” in the western market and along the subway route, and at the same time increased customer development efforts. At the same time, it has also increased its customer development efforts, and held a number of marketing promotion conferences in Hebei, Shanxi, Shandong and other places. In the first half of the year alone, 98 customers were developed, with a supply of more than 7.4 million tons. We expect that as the advantages of the Rizhao Port Railway are further highlighted, the appeal to customers in surrounding regions will continue to increase. The logic for predicting port throughput growth has been validated. Our in-depth report on “Performance Growth Expectations Are Clear, Rapid Development Is Time” published on June 18, and the logic of boosting throughput was initially verified. We expect that as the Ministry of Transport further implements the commodity “transit rail” policy, the country's railway freight volume will continue to increase. Rizhao Port, as the only port in the country with two direct railway lines of more than 1,000 kilometers, will continue to benefit, and the steady progress in the construction of a high-quality steel base will continue to drive the growth of iron ore cargo in Rizhao Hong Kong. Profit forecast. We expect the company's EPS in 2018-2020 to be 0.19, 0.20, and 0.21 yuan respectively, 16, 16, and 15 times the corresponding current price of PE. We will continue to give 20-23 times PE in 2018, corresponding to the reasonable value range of 3.8-4.37 yuan. Give it a “superior to the market” rating. Risk warning. The trade war between China and the US continues to worsen, and the construction of a high-quality steel base falls short of expectations.