Guide to this report: The company plans to introduce the strategic investor Guangwu Holdings through a private offering. We believe that Guangwu Holdings will cause positive changes in the company's development strategy, raw material procurement, and steel transportation, and is optimistic about the company's continued development in the medium to long term. Investment Essentials: Maintaining an “Overweight” rating. The company plans to raise no more than 2.5 billion yuan in total capital through the non-public offering of shares, and plans to introduce Guangwu Holdings as a strategic investor. After the completion of this non-public offering, Guangwu Holdings will hold 0.96% of the issuer's shares. This strategic cooperation is beneficial to the company's long-term development. It raised the company's EPS forecast for 2020-2021 to 0.75/0.82 yuan (previously 0.65/0.66 yuan), and added the company's 2022 EPS forecast to 0.88 yuan. Referring to similar companies, the company was given a valuation of PE 8X in 2020, and raised the company's target price to 6 yuan (originally 5.46 yuan), maintaining the “increase in holdings” rating. Guangwu Holdings has strong strength and is expected to complement the company's advantages and produce synergistic effects. Guangwu Holdings is a leading enterprise in the production materials distribution industry in South China, and has a clear competitive advantage in main businesses such as automobile and parts sales, metal materials sales, and logistics. The business of Guangwu Holdings and the company is highly complementary, and the two sides are expected to have obvious synergy effects in steel trade, raw material supply, waste recycling, warehousing and logistics. The company's development strategy is expected to change positively. After this private offering, Guangwu Holdings will nominate a non-independent director candidate to specifically participate in the company's operation and management. We believe this indicates that Guangwu Holdings will gradually export to the company its in-depth understanding of the downstream steel industry and introduce industrial resources in the field of data circulation to enhance the breadth and depth of the company's strategic layout. The company is expected to become the most competitive steel enterprise in South China. Optimistic about the company's medium- to long-term development, performance may exceed market expectations. Guangwu Holdings is deeply involved in the steel distribution market in Guangdong, Hong Kong and Macao, and will effectively broaden the company's steel product sales channels and improve the company's product structure. In addition, Guangwu Holdings has extensive experience in raw material procurement and warehousing and logistics services, and the company's raw materials and transportation costs are expected to gradually decline. As a leading steel company in Guangdong Province, the company's performance may exceed market expectations. Risk warning: The development of the epidemic has exceeded expectations; the supply-side rise has exceeded expectations.