Key investment points: In 2016, the performance after deduction increased sharply by 57.66%. The company's main business is R&D, production and sales of pesticides, flame retardants and other fine chemical products. The main products are products such as chlorpyrimidine, pyrimidine and pesticide formulations, decabromodiphenyl ethylene and hydrobromic acid. In 2016, the company achieved revenue of 1.351 billion yuan, an increase of 20.28% over the previous year; realized net profit after attribution and deduction of 184 million yuan, an increase of 57.66% over the previous year; and achieved a basic EPS of 2.40 yuan/share. 1Q2017 achieved revenue of 353 million yuan, an increase of 15.17% over the previous year; realized net profit after attribution and deduction of 46 million yuan, an increase of 14.05% over the previous year; and achieved an EPS of 0.47 yuan/share. Prices of major products have increased dramatically, helping the company improve its performance. In 2016, the company's pesticides and pesticide intermediates accounted for 65% of revenue, sales volume increased 12.71% year on year, revenue increased 23.27% year on year; gross margin was 45.5%, an increase of 8.44 percentage points over the previous year. During the reporting period, the sharp increase in the company's revenue was mainly due to a sharp increase in the sales scale and product prices of pesticide products; the company's main product, Baobacteria, was affected by the relationship between supply and demand in the market. The average sales price from January to September 2016 was 31,299 yuan/ton, up 22.71% from 2015; decabromodiphenyl ethylene and hydrobromide increased 13.75% and 30.86% year-on-year respectively. There is still room for improvement in production capacity utilization of pyrimidine drugs and pesticide formulations, and short-term performance growth is guaranteed. At present, the production capacity utilization rate of the company's main products, chlorodecabromodiphenylethane, and bromocyanic acid, is becoming saturated. We believe that in the short term, the company's performance growth will mainly depend on the release of production capacity from pyrimidine drugs and pesticide formulations. According to our estimates, in 2016, the production capacity utilization rate of pyrimidine drug was about 77%, and the pesticide formulation production capacity utilization rate was about 76%. There is still room for improvement in the company's production capacity utilization rate. The sales volume of these two products is still expected to grow rapidly this year and next two years, becoming the main driving force for the company's performance growth. Fund-raising projects are progressing in an orderly manner, and the company's performance is expected to reach another level. The company's IPO raised funds for the construction of 1000 tons of pyrimidine raw materials, 10,000 tons of pesticide formulations per year, technical transformation of pesticide formulations with an annual output of 9,000 tons, annual production of 2,500 tons of melamine polyphosphate, 10,000 tons of compound flame retardant masterbatch, and Shanghai R&D laboratory projects. Currently, the company's fund-raising project is progressing in an orderly manner. We judge that the production capacity of the original drug pyrimidine is expected to be released as early as 2018, while the pesticide formulation production capacity will be released one after another in 2019 and beyond. The total production capacity is expected to reach the company's revenue and profit scale after delivery, and the company's performance in 2019 is expected to reach the next inflection point. Profit forecast. We expect the company to fully dilute EPS in 2017-2019 to be 2.01, 2.38, and 3.10 yuan/share, respectively. The company's performance will reach the next inflection point in 2019, with a PE valuation of 26 times in 2017, with a target price of 52.26 yuan, covering the “increased holdings” rating for the first time. Risk warning. Risk of price fluctuations of raw materials, risk of fluctuations in product prices.