Investment highlights: POF is the leader in the heat shrinkable film industry. The company is mainly engaged in R&D, production and sales of multi-layer co-extruded polyolefin heat shrinkable film (POF heat shrinkable film for short) products. In the POF heat shrink film industry, the company's domestic market share ranked first, and the global market share ranked second. POF heat shrinkable film products can be subdivided into 3 categories according to specific uses and processes: POF ordinary film, POF crosslinked film, and POF high performance film. Currently, the sales revenue and gross profit of the company's three categories of products all account for more than 95%, which is the main source of the company's revenue and profit. In 2016 Q1, due to factors such as falling raw material costs, the company's product gross margin increased, and net profit of 2,065,600 yuan was realized in the first quarter, an increase of 268.15% over the previous year. The proportion of cross-linked films with high added value continues to increase, and high-performance functional polypropylene films have entered the trial production stage. In a situation where competition for ordinary film products is becoming increasingly fierce, the company is actively promoting the optimization and adjustment of product structure, and the share of high value-added products such as cross-linked films has steadily increased. In 2015, the gross profit margin of the company's POF cross-linked film was 41.5%, while the gross margin of POF ordinary film was 25.7%, and the sales volume of crosslinked film was 7,492 tons, an increase of 21.8% over the previous year, and the proportion of the company's sales volume increased from 25.88% to 34.61%. At the same time, in May 2015, the company announced that in order to enrich and expand the company's product structure, on the basis of early R&D tests, the company invested in the construction of a “high-performance functional polypropylene film trial production project”. Through the implementation of this project, the company will be expected to get rid of its current dependence on POF polyolefin heat shrinkable film products, bring new profit growth points to the company's long-term development, and form a good situation for the joint development of both high-performance functional polypropylene film and POF polyolefin heat shrinkable film products. It is conducive to strengthening the core competitiveness of the company's future development, enhancing the company's sustainable development capacity, and long-term development of the company The performance had a significant positive impact. It is planned to raise 120,000 tons of thermoplastic elastomer materials, and the product has a wide range of application fields. In December 2015, the company announced a non-public development plan. It plans to raise no more than 400 million yuan to invest in the construction of a thermoplastic elastomer project with an annual output of 120,000 tons. The construction period of the project is 1.5 years, and it is expected to be ready for use in June 2017. The thermoplastic elastomer materials developed and produced by the company have successfully achieved the production of TPE precursors and the polarization of elastomers, etc., so that on the basis of ensuring good oil filling performance, the product has good heat resistance, oil resistance and wear resistance of nylon, greatly reducing the unit cost of TPAE materials and achieving adjustable hardness, greatly expanding the application fields of TPAE materials. It can be widely used in the production and processing of products in various fields such as halogen-free flame retardant charging pile cables, temperature and oil resistant household equipment packaging materials, oil- and heat-resistant conduits for automobiles, high-strength heat-resistant sports shoe materials, and medical sealing materials that are resistant to high temperature cooking and disinfection, etc., and has very good development prospects. Profit forecasts and investment advice. We expect the company's net profit attributable to the parent company in 2016-2018 to be 9053 million yuan, 134 million yuan, and 172 million yuan respectively, up 33.57%, 47.74%, and 28.47% from the previous year; the corresponding EPS is 0.10 yuan, 0.15 yuan, and 0.19 yuan respectively. The company is a leading enterprise in the POF heat shrinkable film field, but since the company's current stock price is 194 times that of PE in 2016, which is higher than the industry valuation of the rubber and plastic products industry to which the company belongs, there is no rating for the first time. Risk warning. Risk of new project construction falling short of expectations; risk of large fluctuations in raw material prices.