The company released its 2020 semi-annual report: during the reporting period, the company actually produced 3.26 million tons of iron, up 2.4% year on year; 3.9 million tons of steel, up 7% year on year; 3.75 million tons of steel (including rolled billets), up 8.6% year on year; achieved operating income of 14.55 billion yuan, up 5.52% year on year; net profit to mother of 823 million yuan, down 18.26% year on year; deducted non-net profit of 808 million yuan, down 12.48% year on year. Continuously promote cost reduction and efficiency: The company achieved a total cost reduction of 500 million yuan in the first half of the year, of which steelmaking plants reduced costs by 94 million yuan in the face of adverse factors such as the epidemic by increasing capacity utilization; steelmaking plants reduced costs by a total of 186 million yuan by focusing on the ratio of iron to steel and strengthening scrap quality control; at the financial cost level, the company grasped the golden debt window brought about by supply-side reforms, and through measures such as pressure reduction and interest-bearing debt planning, the balance ratio fell 4.27 percentage points from 97.86% at the end of 2015 to 50.74% at the current level, down 4.27 percentage points from last year. . Serving the Greater Bay Area, with broad prospects: The company is located in Guangdong and has a unique location advantage. Its rebar wire has broad application prospects in the context of the strategy of building the Guangdong-Hong Kong-Macao Greater Bay Area. According to the announcement, the company's downstream customers mainly come from large-scale infrastructure projects. Direct sales of ordinary steel account for 65%, and basic direct supply of industrial wire and special steel, delivery, and steady cash flow. With the gradual recovery of downstream demand after the epidemic, the company's other product, medium and thick plates, also has certain advantages. There was heavy rainfall in Guangdong in June of this year, and construction of some projects was affected to a certain extent. As construction conditions gradually improved and superimposed the traditional peak season of “gold nine silver ten,” there is still room for improvement in corporate profits. Initial coverage: Net profit from 2020 to 2022 is estimated to be 1,555 billion yuan, 1,425 billion yuan, and 1,376 billion yuan respectively. The corresponding EPS is 0.64, 0.59, and 0.57 yuan, respectively, and the corresponding PE is 6.83 times, 7.45 times, and 7.72 times, respectively. The first coverage gives an “increase in wealth” rating. Risk warning: Raw material prices remain strong, epidemics are repeated, economic systemic risks, mining disasters, etc., and production capacity in the Liangguang region is gradually rising.