On April 15, the company released the 2019 annual report and performance forecast for the first quarter of 2020: in 2019, the company achieved net profit of 2,347 billion yuan, a year-on-year decrease of 49.09%; during the reporting period, it achieved basic earnings per share of 0.9157 yuan/share, compared to 1.7987 yuan/share the previous year. The company plans to distribute a cash dividend of 4.5 yuan (tax included) to all shareholders for every 10 shares based on a share capital of 2,563 million shares. Based on the closing price on April 14, the dividend rate is 9.05%. In the first quarter of 2020, the company expects to achieve net profit of 128-175 million yuan, a decrease of 54.31%-66.58% over the same period last year. The decline in full-year performance was in line with expectations and significant month-on-month improvements in fourth quarter results. During the reporting period, the company achieved steel production and sales volume of 8.0902 million tons and 8.0469 million tons, up 5.70% and 3.99% respectively over the previous year without additional production capacity. However, the increase in industry supply in 2019 put pressure on steel prices. The average annual sales price of the company's steel products was 3,477.85 yuan/ton, a decrease of 3.57% over the previous year. Meanwhile, due to the collapse of a dam in Vale in Brazil and the hurricane in Australia, iron ore prices fluctuated sharply throughout the year and rose sharply, raising the company's production costs. The company's operating costs increased 8.24% year-on-year during the reporting period. The gross margin of the company's main business in 2019 was 9.78%, a decrease of 4.90 percentage points from the same period last year. The decline in annual performance was in line with changes in the industry. In the fourth quarter of 2019, the overall demand for downstream building materials was stable due to the warm winter. Combined with the decline in iron ore prices, the company's performance improved dramatically, achieving net profit of 863 million yuan, an increase of 294.99% over the previous month. The decline in performance in 2020Q1 due to the pandemic will continue to benefit from the long-term benefits of major regional infrastructure companies located in Liuzhou City, Guangxi Province. It is the largest steel company in South China and Southwest China. Its products are mainly sold to Guangxi and Guangdong regions. The two regions accounted for 85.50% of revenue in 2019. The company currently has a crude steel production capacity of 12.5 million tons per year. The products are mainly building materials and medium and heavy plates. In 2019, the company's profile production accounted for 84.49%, and board production accounted for 15.51%. The products are widely used in automobiles, home appliances, machinery manufacturing and bridge construction. In 2019, the company participated in Guangxi Steel's Fangchenggang steel base project. After production is put into operation, it will facilitate the optimization of the company's product structure and overseas market development, and enhance competitiveness. Affected by the epidemic since this year, the recovery of downstream demand has been delayed, steel inventories have continued to accumulate, and the industry has suffered a major impact. The company's steel production and sales volume and prices fell in the first quarter, and performance is expected to decline year-on-year. With the gradual easing of the epidemic and intensive construction of major projects such as infrastructure, the demand side may accelerate recovery. At the same time, the construction of the Guangdong-Hong Kong-Macao Greater Bay Area will continue to drive local demand for building materials. The company's products are mainly building materials, and it is expected that it will benefit from major regional infrastructure for a long time in the future. Investment suggests that the pandemic may have a rhythmic impact on the supply side of raw materials and downstream demand. Therefore, we adjusted the company's EPS in 2020-2021 from 1.22 yuan/share, 1.27 yuan/share to 1.00 yuan/share and 1.04 yuan/share. The 2022 EPS is expected to be 1.09 yuan/share, maintaining the “buy” rating. Risk warning: The development of the Greater Bay Area fell short of expectations, large fluctuations in raw material prices, and changes in the company's own operations.