Incident: On March 27, Jiugang Hongxing announced its 2016 annual report: the company achieved revenue of 35.09 billion dollars in '16, a year-on-year decrease of 35.93%; net profit of 82.42 million, turning a loss into a profit; of which, 16Q4 achieved revenue of 7.42 billion dollars, a decrease of 35.3% over the previous year, a decrease of 19.63% over the previous year; and net profit of -370 million yuan, a year-on-year increase of 90.3%, a decrease of 264.7% over the previous year. The iron ore self-supply rate is high, and the resource advantages are obvious. The company has rich iron ore resource reserves. It has four mines, including the Huashugou mining area of the Jingtieshan mine, the Heigou mining area, the limestone mine and the dolomite mine, with iron ore reserves of about 350 million tons. The company has steadily promoted the scale of its own iron ore mining. In 2016, iron ore production reached 9.68 million tons. Our own iron ore resources are stable, providing strong support for the company's cost side. In the future, the company plans to improve the grade of iron ore and reduce product costs through upgrading projects. Technological research and development capabilities have improved, and the competitive advantage of stainless steel products is obvious. The company actively promotes scientific and technological innovation and enhances the productivity of high-value-added products such as cold-rolled high-strength steel series products, ultra-pure ferritic stainless steel, and duplex stainless steel products. In 2016, the company produced 5.355 million tons of steel, including 1,075,000 tons of stainless steel and 997,000 tons of stainless steel. The company is focusing on increasing the added value of products such as stainless steel. Among them, stainless steel 2205 duplex steel has been used in environmental protection, petrochemical and other fields. 400 series products have become stable suppliers for enterprises such as containers, automobile exhaust pipes, and building decoration. The product competitiveness has improved, and the level of efficiency is high. The geographical advantage is obvious. The Belt and Road Company is located in the northwest region. The density of railways, highways and highways in the northwest provinces and regions is at the bottom of the country. Xin****hai, and Gansu are in the bottom 5. In order to achieve infrastructure connections between the “Belt and Road” countries, there is plenty of room for investment in infrastructure fields such as urban construction and transportation networks in northwest China. With the further advancement of the “Belt and Road” strategic plan, the company's regional advantages may gradually become apparent, and the performance is worth looking forward to. The company realized a reversal of losses, and its purchase ratings were affected by supply-side reforms. Steel prices rose in 2016, and the company's performance improved drastically in 2016, turning a loss into a profit. The company's own iron ore resources have obvious advantages and can effectively reduce product costs. Research strength is strong, and development in high-end steel markets such as stainless steel is worth looking forward to. Furthermore, the company is located in Gansu Province and is likely to benefit from the Belt and Road Strategy. The estimated EPS for 2017-2019 was 0.36,0.32,0.28 yuan, respectively, and the corresponding PE was 9.1, 10.2, 11.5 times; for the first time, coverage was given to the company's purchase rating. Risk warning: supply-side reforms falling short of expectations, macroeconomic risks, corporate governance, etc.