Maanshan Iron & Steel’s (Magang) 1H14 core net loss widened YoY from RMB393m to RMB792m, worse than the consensus estimate of a RMB368m net loss. 2Q14 net loss narrowed to RMB284m from 1Q14's RMB446m, but still deteriorated from 2Q13’s RMB53m gain. Although Magang has turned around to profit-making since July, thanks to the new depreciation policy and falling iron ore and coking coal costs, it should remain in the red for full-year 2014. The RMB11bn debt maturing by year-end could add pressure on its financial costs. We maintain HOLD and lift our target prices to HK$1.71 (H) and RMB1.78 (A).