Investment Essentials: Maintaining an “Overweight” rating. In the first half of 2020, the company achieved revenue of 14.55 billion yuan, up 5.52% year on year, and realized net profit of 823 million yuan to mother, down 18.26% year on year. The company's performance was in line with expectations. The company's Q2 revenue was 8.276 billion yuan, up 15.94% year on year, and Q2 net profit to mother was 452 million yuan, down 24.93% year on year. Maintain the company's 2020-2022 EPS forecast of 0.75/0.82/0.88 yuan, maintain the company's target price of 6 yuan, and maintain the “gain” rating. The production organization model was optimized, and the company's steel production quickly rebounded. By improving the level of on-site management and operation, the stability of the company's blast furnaces and the compatibility of steelmaking and rolling materials were improved. The company's production quickly recovered after the epidemic, and the monthly output of multiple production lines set records. In the first half of 2020, the company's pig iron and crude steel production were 3.26 million tons and 3.9 million tons respectively, up 2.4% and 7% year-on-year respectively. In the first half of 2020, the company's gross profit per ton of steel was 423 yuan/ton, corresponding to a net profit of 220 yuan/ton per ton of steel. We believe that demand for steel will be good in the second half of the year, and by optimizing production and continuing to reduce costs, the company's performance will continue to be released. The cost of a ton of steel continues to be optimized, and the balance ratio continues to decline. The company's cost per ton of steel (including R&D) in the first half of 2020 was 143 yuan/ton, down 84 yuan/ton from 2019. The company's expenses continued to be optimized. The company continued to reduce costs by searching for differences in benchmarks. In the first half of the year, the company achieved a total cost reduction of 500 million yuan and increased efficiency. At the same time, through optimizing the debt structure, the company's interest-bearing liabilities and balance ratio dropped sharply. As of the first half of 2020, the company's balance ratio was 50.74%, down 2.68 percentage points from 2019. Downstream demand was strong, and industry profits continued to improve in the second half of the year. Demand for real estate and infrastructure in China is strong. The industry demand in the second quarter was much better than in the same period in 2019, and the industry is booming. After the summer heat is over, we expect steel demand to continue to rise and industry profits will continue to improve. Risk warning: The epidemic has developed beyond expectations; the macroeconomy has declined sharply.