Key events in the report describe the company's 2020 Q1 revenue of 0.379 billion yuan, a year-on-year decrease of 20.3%, and attributable net profit of 16.96 million yuan, or -55.18 million yuan for the same period. After deducting non-vested net profit of 36.62 million yuan, it was -74.58 million yuan for the same period. The number of incident reviews dropped and prices increased, and 2020Q1 performance decreased losses. Based on regional sales performance, we expect the company's Q1 net sales volume to drop by about 25% year on year. However, considering the gradual restoration of regional prices, the 2020 Q1 price is expected to rise by about 15 yuan year on year (excluding tax). In addition, the company's other revenue during the reporting period was 33.59 million, an increase of 30.72 million yuan over the previous year; in the end, the company's performance in 2020Q1 reduced losses. Continued optimism about the company's high profit elasticity in 2020 is mainly based on the following three-point logic: 1. Prices have been in a slump for a long time, and there is plenty of room for repair. The Inner Mongolia region of Ningxia has not performed well for a long time. The absolute price of cement has been in the depression of the country for a long time, and is lower than that of other provinces in northwest China, and the cumulative price increase in the current cycle was also weak. As of 20200417, terminal prices in Yinchuan and Hohhot were 350 yuan/ton and 360 yuan/ton respectively, significantly lower than the national 432 yuan/ton and East China 465 yuan/ton. 2. A supply-side repair inflection point has appeared. Ningxia is bordered by Mengxi. Regional prices are too low mainly because there are many calcium slag clinker companies in the surrounding area. By virtue of low cost and fewest kilns, this in turn clearly curbs the regional erroneous order and competitive mentality. In 2020, the region actively promoted the replacement of calcium slag companies and traditional clinker companies, and four traditional cement clinker companies, including Inner Mongolia Jidong Cement, exchanged production capacity with 5 electric slag companies in and around Wuhai. Traditional enterprises stopped producing clinker for 1-4 months, and the calcium slag companies would then sell and supply it. Under the dual support of limited total supply and orderly distribution of false peak production, the competitive pattern will be significantly improved, thus providing upward price momentum, and both companies are a win-win approach. This will also become the core logic of regional price increases in 2020. 3. There is still a good match for demand. Ningxia's annual demand capacity is small, and the total output is less than 20 million tons, so regional prices are easily affected by peripheral markets. Steady infrastructure growth took the lead in 2020, and the northwest market took the lead in benefiting. Judging from the current issuance of special bonds and approval of key projects, there are already signs of acceleration. At the same time, looking at the rapid restoration of cement shipments in Gansu, Qinghai and other regions, at a glance, they have now surpassed the same period, and the surrounding relevant regional markets will be linked to profits. At the same time, about 20% of Ningxia's building materials production capacity is distributed in Gansu, and it is expected that they will directly enjoy the dividends of price increases unleashed by accelerated demand in Gansu. Assuming that the company's sales volume remained flat in 2020, the average factory price increased by 30 yuan/ton (excluding tax), and the annual performance reached 1.08 billion yuan, corresponding to PE 6 times, giving it a purchase rating. Risk warning: 1. Poor implementation of regional erroneous peak replacement; 2. The commencement of key projects in the surrounding area was insufficient.