1H performance declined slightly, in line with market expectations, and Tielong Logistics announced 1H19 results: operating income of 7.771 billion yuan, +1.3% year over year; net profit to mother 266 million yuan, -4% year on year, corresponding to EPS of 0.20 yuan. Among them, 2Q net profit was -5% year-on-year, down from -3% in 1Q. Basically in line with the market's low expectations. (1) Railway special container business: container shipments reached 740,000 TEU, +35% year over year; operating income of 809 million yuan, +38% year over year; gross profit of 163 million yuan, +22% year over year, gross margin decreased by 2ppt. (2) Railway freight and port logistics business: The Shaba Line completed a delivery volume of 26.25 million tons, +2% year over year; revenue of 1,159 million yuan, +8% year over year; however, due to falling freight rates and customer fee cuts, etc., gross profit was 210 million yuan, -4% year over year; gross margin decreased by 2ppt. (3) Commissioned processing trade business: sales volume of 1.69 million tons of steel billet, +2% year over year; operating income of 5.508 billion yuan, -3% year over year; thanks to cost control, gross profit of 110 million yuan, an increase of 30% over the previous year; gross margin increased slightly by 0.5ppt. (4) Others: Railway passenger transport business revenue was RMB 22 million, +0.06% year-on-year. Due to poor market conditions, the real estate business had revenue of 223 million yuan, -19% year over year; gross profit of 52 million yuan, down 8% year on year. Development trend The special box business has achieved a year-on-year growth rate of more than 10% in gross profit for two consecutive years, indicating that economic benefits are gradually being reflected. However, we think 2H's performance is still under some pressure. 1) The railway freight business may be affected by macroeconomic demand, and factors such as customer fee reduction may improve little in a short period of time; 2) The special container business is still under cultivation, and profit growth is still not as fast as revenue growth. 2) Commissioned processing trade is currently operating well, and the future will focus on industry policy orientation. Profit forecasts and valuations were lowered by 13% to 485 million yuan (-5% YoY) and the 2020 profit forecast by 12% to $532 million (+10% YoY) due to continued pressure on freight growth and the downturn in the real estate market. Maintaining a neutral rating, the target price was lowered by 30% to 6.14 yuan (corresponding to the price-earnings ratio of 16.6 times in 2019) based on performance adjustments. Currently, there is room for a 2% increase. The current share price is trading at 16.2 times the 2019 price-earnings ratio. Risk: The macroeconomic economy is sluggish; the development of the special container business falls short of expectations.