Main Opinions 1. Nentite Technology's ability to innovate large-scale production processes is the core competitiveness of the “Thousand Talents Program”, a combination of Dr. Cai Dongwei and Chairman Chen Liequan to develop and produce a variety of pharmaceutical intermediates with high technical content, and has obtained multiple invention patents. He is good at chemical reactions such as methylation reactions of benzene rings, air oxidation reactions, carbonation reactions, chiral splitting, Grignard reactions, etc. As a result, a pioneering process with low cost and low pollution has developed Ve key intermediate products including trimethylphenol and trimethylhydroquinone, which not only broke BASF's monopoly on trimethylhydroquinone, etc., but also has the ability to dominate trimethylhydroquinone. Next, it will be extended to large-scale production of Ve, and will continue to expand into fields such as vitamin A, K3, and PPO (engineering plastics) in the future, forming a strong product echelon. Confidence in 22,000 tons of vitamin E has greatly reduced production costs. Vitamin E consists of trimethylhydroquinone (mother ring, accounting for 35% of the cost) and isophytol alcohol (a side chain composed of 20 carbons, C20 for short, accounting for 65% of the cost). For the synthesis of the mother ring, the company used inexpensive paraxylene as the starting material, and the oxidizer replaced potassium permanganate, reducing the overall cost by about 50%; in the synthesis of isophytol, the traditional process uses C5 as a raw material to obtain C20 through three major cycles, and C20 is obtained by connecting C5 each time, while the company uses fanilene (C15, which comes through a biological fermentation method, external procurement, and reached the only usage agreement in the field of vitamin E) with the target company to obtain the C20 side chain. The company has broken through the core technical bottleneck of the process. According to the company announcement, the comprehensive tax-inclusive cost of producing vitamin E is less than 40 yuan/kg, and the average production cost is about 30% lower than other vitamin E manufacturers. If the price of Ve is 60-120 yuan/kg in the next two years, the additional profit will be about 32 to 1.68 billion yuan. 3. Investment advice: The company has greatly reduced the production cost of Ve through process innovation, the aquaculture industry is in strong demand for feed additives, and the medium- to long-term price of vitamin E is bullish. Plastic rice information is estimated based on test preparation performance (not considering supporting financing). The company's net profit for 2016 to 2018 is 4.04/7.63 billion yuan, EPS is 0.48/0.91/1.48 yuan, respectively, and the corresponding PE is 33/18/11 times. Give it a “Highly Recommended” investment rating. 4. Risk warning: risk that large-scale production of vitamin E will not meet expectations; risk of not being able to fulfill the agreement on exclusive cooperation with C15 farniene; risk of vitamin E price fluctuations.