Angang 9M16 preliminary NPAT beats DBe and Bloomberg consensusAngang announced a profit warning after market close on 13 October 2016. Its9M16 preliminary profit was reported at RMB 977m and 3Q16 NPAT reachedRMB677m. The 9M16 preliminary profit achieved 97% FY16DBe and 133% ofBloomberg consensus estimates. The result should be read positively by themarket. The strong 3Q16 NPAT at RMB677m in 3Q16 happened after animpressive NPAT of RMB915m in 2Q16. These results look sensible and in linewith the market steel spreads we tracked, which were relatively stable in 3Q16and only c. RMB100/t than that in 2Q16.
　　Neutral outlook on steel spreads/profitability in 4Q16; Hold maintainedIn our view, current steel spreads/profitability should remain stable until early4Q, as September/October represents the seasonal peak for constructionactivities. However, in the mean time, the rapid increase of coking coal pricemight hurt Angang's margin a little into late 4Q16. As such, though the 9M16is impressive, we maintain Hold for Angang, with the stock trading at 0.6xPBx. Our TP of HK$4.25 remains unchanged.