The largest manufacturer of commercialized colorants in China. The company is a leading enterprise in R&D, production and sales of colorants in China. Its main products are environmentally friendly, ultrafine water-based colorants. The products are mainly used in the paint, latex, paper, leather, textile and ink industries, and is in a leading position in market segments such as architectural paint paste, latex pigment paste, and paper paste. At the same time, the company also provides customers with overall color solutions. It is one of the few domestic enterprises with the ability to provide comprehensive color solutions. It has independent intellectual property rights such as color measurement software, machine color paste, and integrated color mixing systems.

Commercialized colorants have obvious competitive advantages and are in line with industry trends. Commercialized colorants refer to colorants produced and sold by professional colorant manufacturers to companies that use colorants. Compared with self-polishing colorants, commercialized colorants have three advantages: (1) commercialized colorants can effectively improve pigment utilization and have stronger energy saving and environmental protection effects; (2) commercialized colorants have higher product quality and better performance; (3) the product performance of commercialized colorants is more stable. At present, domestic commercialized colorants are mainly concentrated in the field of water-based colorants, and the commercialized solvent-based colorants market is still in its infancy. As the country's requirements for green environmental protection and downstream customer quality continue to improve, it is expected that commercialized colorants will have greater development potential and market space in the future.

Leading technology, professional service. The company has mastered a large number of patented and unpatented technologies in the colorant industry. The average particle size of pigment particles in the water-based colorant produced is less than 500 nm, far less than the industry standard level of 20-25 microns. The average pigment particle size of some products is less than 100 nm, reaching the level of nanoscale colorants. The company is also one of the few companies in the industry that has comprehensive color solutions for color matching software, machine color paste and integrated color mixing systems. It has a huge color database that matches the company's color paste products, which can provide fast, accurate, economical and rich color solutions for downstream users. At the same time, the company is also equipped with a complete after-sales service system and set up a professional technical service team to understand customer needs and promptly solve problems encountered by customers during use.

Part of the production line of the fund-raising project has entered the trial production stage. The company's initial public stock offering project was the “20,000 ton water-based colorant production line and self-use additive construction project”. At present, the construction work of the company's fund-raising project is progressing steadily, and the overall construction is progressing relatively smoothly. Production equipment for some production lines has been installed and commissioned, and the trial production stage has begun. The construction of fund-raising projects will break the bottleneck in the company's production capacity and enable the company to penetrate into more fields of colorant applications, thereby expanding the product line, enriching the variety of products, and improving economic efficiency. According to the prospectus, the company expects that the project will add 362 million yuan in sales revenue and 78.415 million yuan in net profit every year after delivery. At the same time, the company's R&D and testing capabilities will be greatly improved.

Profit forecasts and investment recommendations. We expect the company's net profit from 2016 to 2018 to be 65.3 million yuan, 84.42 million yuan, and 104 million yuan respectively, up 18.12%, 29.27%, and 22.61% year-on-year. The corresponding EPS is 0.98 yuan/share, 1.27 yuan/share, and 1.55 yuan/share, respectively. The closing price on 2017/3/10 was 84.21 yuan, corresponding to 66 times PE in 2017, slightly higher than sub-new stocks in the pigments and coatings sector. There is no rating yet.