The price of coke has risen sharply, and the company's profit is expected to improve markedly. The company is located in the most important main coking coal production area in Northeast China and the largest anthracite production base in Heilongjiang Province. It has obvious resource location advantages. Currently, it has a coal mining capacity of 1.18 million tons, a coal washing production capacity of 3.9 million tons, and a coke production capacity of 1.58 million tons. Since this year, benefiting from production capacity clearance and supply-side reforms, China's coal coking market has experienced a tight balance between supply and demand. Prices of related products have risen sharply, and the company's profits are expected to improve markedly. The company has obvious advantages in the circular economy. Benefiting from the recovery in oil prices, coal chemical profits are expected to improve. The company is actively developing a circular economy model and establishing a “coal-electricity-chemical-oil” integrated industrial chain, with obvious cost advantages. Prices of the company's coal chemical products such as methanol, crude benzene, and fuel oil are significantly affected by international oil prices. In the second half of 2016, with the recovery of petroleum prices, domestic methanol prices rose to 2,800 yuan/ton, and crude benzene prices also showed signs of recovery. We expect that along with the recovery in oil prices, the gross margin of the company's coal coking business is expected to return to normal levels. The company actively transforms and lays out the new graphene materials industry. In recent years, the graphene industry, an emerging material, has developed rapidly, and its production and application in the low-end field have begun to take shape. Graphene has huge application potential and commercial value. According to BBCResearch's forecast, the global graphene market may exceed 1.3 billion US dollars in 2023, and there is plenty of room for market growth. The company is actively transforming the graphene new materials industry. By purchasing patented graphene production technology and establishing a research and development center, the company plans to build a graphite industry cluster and focus on developing the graphene and power battery industries. At present, the company's 100 tons/year graphene project has entered the commissioning stage. Profit forecast and investment rating: According to the company's current share capital (not considering additional projects), we expect the company's EPS in 2016, 2017, and 2018 to be 0.10, 0.15, and 0.21 yuan, respectively, and the PE corresponding to the closing price of January 03, 2016 (7.28 yuan) will be 76, 47, and 35 times, respectively. Considering the company's future transformation and layout in the new materials industry, we gave the company a stock target price of 7.8 yuan, which covered the company's “gain” rating for the first time. Stock price catalyst: Coal and coke prices remain high, oil prices have risen sharply, downstream industrialization of graphene has made breakthroughs and progress, and the country has promulgated policies related to the graphene industry. Risk factors: In the future, oil prices will continue to run low, coal and coke prices will drop sharply, and the graphene industrialization process will fall short of expectations.