Investment highlights: News/announcements. Tielong Logistics released its 2019 interim report. In the first half of the year, the company's operating income was 7.771 billion yuan, up 1.29% year on year; realized net profit of 266 million yuan, a slight decrease of 4.30% year on year; net profit after deducting non-return net profit of 253 million yuan, a slight decrease of 2.59% year on year; basic earnings per share of 0.204 yuan, with a weighted average ROE of 4.58%. The performance was about 10% below expectations. In the first half of the year, freight and miscellaneous expenses declined, and the gross profit of Lingang Logistics declined, which became the biggest obstacle to profit growth. In April, the General Administration of Railway requested that freight charges for metal ore sent from the Shenyang Bureau to the Harbin Bureau be reduced by no more than 30%. The company's freight charges fell as required, and responded positively, seizing the implementation window of the “transit rail” policy, increasing the proportion of bulk goods railway transportation in the region. The total delivery volume of the Shaba Railway during the reporting period was 26.2527 million tons, an increase of 2.46% over the previous year; benefiting from other logistics business revenue growth, etc., the railway freight and port logistics business segments achieved revenue of 1.159 billion yuan, an increase of 8.02% over the previous year. However, the decline in freight rates directly affected gross profit, leaving the sector's gross profit of only 210 million yuan, down 4.49% year on year, and gross margin down 2.37 percentage points year on year. The Ministry of Transport continues to promote multimodal transport, with special cases increasing 35% year over year. Promoting multimodal transport is part of the national transport development strategy. In 2017, 18 departments including the Ministry of Transport jointly issued a document encouraging the development of multimodal transport work. The railway special container transport logistics business operated by the company, as the company's strategic core business segment, is an important part of multimodal transport. A total of 738,900 TEUs were sent during the reporting period, up 34.66% year on year; revenue was 809 million yuan, up 37.62% year on year; and gross profit was 163 million yuan, up 22.81% year on year. Entrusted processing trade and passenger transportation to maintain steady development. During the reporting period, the contract processing trade business achieved sales revenue of 5.508 billion yuan, a year-on-year decrease of 3.12%; by strengthening operating cost management, it achieved gross profit of 110 million yuan, an increase of 25.6 million yuan over the previous year. However, on the other hand, the contract processing business increased freight and miscellaneous expenses, which led to an increase in sales expenses. The railway passenger transport business remained stable, achieving revenue of 22 million yuan, an increase of 0.06% over the previous year; the sector's gross profit margin was 53.31%, a slight decrease of 0.40 percentage points over the previous year. The real estate business achieved revenue of 223 million yuan, a decrease of 19.39% over the same period last year, and a gross profit of 52 million yuan, a decrease of 7.62% over the previous year. In the future, we will continue to focus on the increase in the special case business and the increase in shipping volume on the Saba Line. The railway special container transportation business is the company's strategic core business segment. With the gradual introduction of new boxes, there is still a lot of room for growth in the scale of the business. The Shaba Line is the company's core asset. The railway freight and port logistics business have contributed the most gross profit. The marginal impact of falling freight rates has been released in the short term. The “transit to rail” policy has not abated, and future attention will be paid to traffic growth. Lower the profit forecast and maintain the “increase in holdings” rating. Considering that the company's freight costs were lowered in the first half of the year, we re-calculated the company's future profit situation and lowered the profit forecast. The estimated net profit for the year 2019-2021 was 514 million yuan, 579 million yuan, and 663 million yuan (original forecast of 585 million yuan, 667 million yuan, 784 million yuan), corresponding to the current stock price PE 15 times, 14 times, and 12 times respectively. The stock price fell to an undervalued position, maintaining the “increase in holdings” rating. Risk warning: the volume of special containers and sand bars falls short of expectations