Event: The company released its report for the first quarter of 2017, with revenue of 323 million yuan, an increase of 20.5% over the previous year, and net profit attributable to shareholders of listed companies of 6.45 million yuan, an increase of 45.53% over the previous year. The company's gross profit margin was 24%, the same year on year over year, and the company's three-fee rate was 19%, up 3 percentage points from the fourth quarter, mainly due to the increase in the management fee rate (up from 10% to 12%). According to information from the Pesticide Association, the prices of the company's main products, such as KMB, fluctuated but remained basically the same. We judge that the company's main source of revenue growth was the recovery in industry demand and increased product market sales, which led to a significant increase in performance. Demand for new varieties has broad prospects, and we look forward to the Changde project being strengthened. The company launched a non-public development plan in the second half of last year, and plans to raise 460 million yuan to invest 9,000 tons of heterocyclic pesticides and intermediates and 4,100 tons of green pesticide projects, including thiamethoxazole, o-hydroxytolonitrile, CCMT, thiamethoxam, thiamethamide, pyrazolacil, furomethamine, etc.; they are all new highly efficient and low-toxic pesticides and intermediates, and future market demand prospects are broad. According to the announcement, at present, the project has already raised capital for construction and is expected to be completed in the third quarter. The announcement predicts that the annual profit will reach 120 million yuan. Shareholder subscriptions highlight stock value, and employee shareholding optimizes internal incentives. Hailey Group, the majority shareholder of the company, and the employee shareholding plan have subscribed for 63.82 million yuan (13.8%) and 49.99 million yuan (10.82%) respectively. The majority shareholders' subscription highlights the value of the company's shares. Employee shareholding forms a perfect incentive chain, which is conducive to raising the level of internal governance and improving the current situation where management expenses are high. The fixed price increase plan is 7.53 yuan/share. The current stock price is 8.7 yuan, highlighting the high margin of safety. Light gas resources constitute a barrier to industry. Phosgene is a key raw material for pesticides, but due to its high toxicity, it is strictly regulated. According to the Phosgene Association, there are only 38 phosgene manufacturers in the country. Hailey Guixi and Hailey Changde, which are owned by the company, have 10,000 tons of light gas, building a barrier to scarce gas resources. Investment advice: We expect the company's profit from 2017 to 2019 to be 62, 1.03, 122 million yuan, and EPS of 0.16, 0.27, 0.31 yuan. For the first time, we have given the buy-A investment rating, and the target price for 6 months is 11 yuan. Risk warning: The market price of the new project product falls short of expectations