Events: on October 30, 2016, the company announced that its operating income was 720 million yuan, down 27.16% from the same period last year; the net profit belonging to the shareholders of the parent company was 122 million yuan, up 126.62% from the same period last year; and the net profit after deduction of the parent company was 73 million yuan, an increase of 147.36% over the same period last year.

Comments: performance in line with expectations, orderly promotion of vitamin E project construction and plastic rice city will be, the future growth momentum is strong, to maintain the "buy".

In the third quarter of 2016, the company promoted the vitamin E project in an orderly manner and reached an exclusive supply and equity investment agreement with Amyris of the United States. the wholly-owned subsidiary Nengte Technology Co., Ltd. participated in 10 million shares (4%) of Amyris and obtained the exclusive right to use its farnesene in the field of vitamin E. According to the company's announcement that plastic Rice City has achieved a net profit of 59 million yuan in the first half of 2016, we expect to achieve a net profit commitment of 115 million yuan for the whole year. The smooth passing of the plastic Rice City additional project will provide another profit growth point for the company. We maintain the original recommendation logic, the company successfully promoted the vitamin E project and the subsequent plastic B2B business on the basis of the divestiture of the original ceramic, bamboo, glass and other household products production and distribution business. Vitamin E and plastic Rice City are expected to contribute 730 million and 150 million profits respectively in 2017, the company's profitability has greatly improved and maintained "buy". (please refer to our in-depth report "002102.SZ-overcoming the Technical bottleneck and entering the VE Industry in large scale, and the performance is expected to explode next year") in the long run, the company's dual main business of pharmaceutical intermediates and plastic B2B will drive the company into a "new era" of growth model. Based on the product reserve of Nengte Technology's follow-up research and development, the company's expectation of developing plastic B2B business, and the strong synergy between pharmaceutical intermediates and e-commerce platform, we believe that the company is expected to further open up the market space and expand the company's revenue scale through cost advantage and sales channel reform.

Profit forecast and investment advice: the company's performance in the next three years is mainly driven by the rapid release of vitamin E products, plastic rice city and plastic B2B business. The company has completed the mid-2016 capital reserve fund to increase equity, so we adjust our equity and earnings per share forecasts accordingly. Excluding the additional issuance of plastic Rice City, we expect the company's operating income from 2016 to 2018 to be 7.90,23.26 and 2.566 billion yuan respectively, an increase of-39.95%, 194.26% and 10.34% over the same period last year, and the net profit belonging to the parent company is 2.04,7.01 and 875 million yuan respectively, an increase of 5.53%, 243.64% and 24.88% over the same period last year, and the corresponding EPS is 0.09,0.32,0.40 yuan respectively. Considering the additional issuance of plastic Rice City, we expect the company's operating income from 2016 to 2018 to be 7.90,133.26 and 18.516 billion yuan respectively, an increase of-39.95%, 1585.98% and 38.95% over the same period last year, and the net profit belonging to the parent company is 2.04,9.02 and 1.081 billion yuan respectively, an increase of 5.52%, 342.09% and 19.92% over the same period last year, corresponding to EPS of 0.09,0.34,0.41 yuan respectively. The company's current stock price corresponds to 17 × PE in 2017. Considering that the company has more room for development in vitamin E plate, plastic rice city plate and new materials plate in the future, vitamin E business and plastic B2B business are expected to contribute 730 million and 150 million profits respectively in 2017, giving the company vitamin E business 17 times PE (technology breakthroughs enjoy valuation premium), pharmaceutical intermediate business 22 times PE, plastic B2B business 30 times PE. The corresponding target price is 6.67-7.33 yuan, maintaining the "buy" rating.

Risk tips: the risk of vitamin E price fluctuations; the risk of increased competition; the risk of uncertainty due to the plastic rice city fixed increase plan; the risk that the company's vitamin E production and sales are not as expected.