The industry was in turmoil, and the decline in profit was adversely affected by the sharp rise in iron ore prices and the decline in steel prices, and the company's profit declined. In 2019, the company's annual production of iron, steel and materials reached 12.46 million tons, 13.67 million tons, and 8.09 million tons, respectively, up 2.52%, 4.50% and 5.69% from the previous year. The company achieved operating income of 48.620 billion yuan, up 2.68% year on year; net profit attributable to shareholders of listed companies was 2,347 billion yuan, down 49.09% year on year. The company's performance is in line with expectations. The fourth quarter's performance improved significantly from month to month. The fourth quarter benefited from the recovery in the small lumber market and the fall in iron ore prices. The performance improved significantly compared to the third quarter. The company achieved net profit attributable to shareholders of listed companies of 863 million yuan in the fourth quarter, an increase of 294.99% over the previous quarter. By product, the company's small material sales volume in the fourth quarter increased 29.27% month-on-month, and the corresponding average sales price increased 3.98% month-on-month. Participated in the Fangchenggang Steel Base Project In 2019, the company participated in Guangxi Steel's Fangchenggang Steel Base Project. The construction scale of the Fangchenggang project is 9.19 million tons/year. The main steel products include 3.6 million tons of bars, 1.8 million tons of high-speed wire, 1.96 million tons of hot-rolled strip steel, and 2.1 million tons of cold-rolled strip steel. It is expected that all construction and inspection will be completed in January 2021. After production is put into operation, it helps the company improve the existing product supply system, optimize the product structure, and meet the diversified needs of customers. Continued high dividend returns to shareholders In 2019, the company plans to implement cash dividends and distribute cash dividends of 4.5 yuan (tax included) to all shareholders for every 10 shares, for a total cash dividend of 1.53 billion yuan, accounting for 49.14% of the net profit attributable to common shareholders of listed companies. According to the closing price on April 14, the company's dividend rate reached 9.05%. Risk warning: Steel consumption has declined sharply. Investment advice: Maintain the “increase in holdings” rating of the company as one of the leading steel mills in South China, with a location advantage; high asset efficiency, strong profitability; and steady dividends. We expect the company's revenue in 2020-2022 to be 466/477/487 billion yuan, with a year-on-year growth rate of -4.1/2.3%/2.1%, net profit of 20.5/22.2/22.8 billion yuan, a year-on-year growth rate of -12.6/8.1/ 3.0%; diluted EPS is 0.80/0.86/0.89 yuan, and the current stock price corresponding to PE is 6.3/5.8/5.7x. There is room for repair in the company's valuation and maintains an “increase in holdings” rating.