Investment points: The performance of the first half of the year was in line with expectations: In the first half of 2016, the company's revenue fell 1.1% to 2.42 billion yuan, mainly due to the year-on-year decline in product unit prices. Among them, the price of steel cord for trucks fell to 8,960 yuan/ton in the same period last year, sales volume increased 11.3% from 153,000 tons to 170,000 tons, and the price of passenger steel cord products increased slightly to 8,755 yuan/ton in the same period last year, and sales volume increased 12.3% to 111,000 tons, and 3.1% year-on-year increase in gross profit At 486 million yuan, gross margin increased to 20.1% from 19.3% in the same period last year, and profit attributable to equity holders fell 48.9% year on year to 74.9 million yuan, mainly due to one-time investment income from disposal of A-shares in the first half of 2015 of 130 million yuan. The adjusted profit attributable to equity holders increased 18.4% year on year to 85.6 million yuan, in line with our previous expectations. The price increase campaign has begun: since the company's steel cord products mainly notified customers of price increases in May and June, the actual implementation has reached June and July, so the price increase had little impact on the average unit price of the first half of the year. More impact is reflected in the second half of the year. The average price of steel cord products is expected to increase by 1,000 yuan/ton twice in the first half of the year. As a result, the monthly performance in June accounted for 42% of the performance in the first half of the year, and the performance in July and August was even better than in June. June-August is a low season for the industry, but the company's orders far exceed the company's production capacity. In August, the company's orders reached 68,000 tons, and September was about the same as in August. Therefore, the probability of further price increases in September and October is extremely high. After the continuous price reduction over the past few years, there is almost no possibility that the price of the company's products will drop again. Continue to raise profit expectations: Since implementation of new pricing began in June and July, it can be expected that the company's performance in the second half of the year will be very good, so we are also raising our profit expectations for the whole year. Highly recommended rating: 2016 was a year where the company's performance was reversed. Product price increases are expected to be strong, and gross margin determination will also improve significantly. Referring to the company's historical PE valuation, it was given 10 times PE in 2017. The target price is HK$3.69, with room for growth of 47.6%.