Investment highlights: POF heat-shrinkable film industry leader. The company is mainly engaged in R&D, production and sales of multi-layer co-extruded polyolefin heat-shrinkable film (POF heat-shrinkable film for short) products. In the POF heat shrinkable film industry, the company ranked first in domestic market share and second in global market share. POF heat-shrinkable film products can be subdivided into the three categories of POF ordinary film, POF crosslinked film, and POF high-performance film according to specific uses and processes. Currently, the sales revenue and gross profit of the company's three categories of products all account for more than 95%, which is the main source of the company's revenue and profit. 2016Q1 The gross margin of the company's products increased due to factors such as falling raw material costs, and achieved net profit of 20.6656 million yuan in the first quarter, an increase of 268.15% over the previous year. The proportion of high-value-added cross-linked films continues to increase, and high-performance functional polypropylene films have entered the trial production stage. In a situation where competition for ordinary membrane products is becoming increasingly fierce, the company actively promotes the optimization and adjustment of the product structure, and the proportion of high-value-added products such as cross-linked films is steadily increasing. In 2015, the gross profit margin of the company's POF crosslinked film was 41.5%, while the gross margin of POF ordinary film was 25.7%, and the sales volume of crosslinked film was 7,492 tons, up 21.8% year on year, accounting for 25.88% to 34.61% of the company's sales volume. At the same time, in May 2015, the company announced that in order to enrich and expand the company's product structure, on the basis of early R&D tests, the company will invest in the construction of a “high-performance functional polypropylene film prototype project”. Through the implementation of this project, the company will hopefully get rid of its current dependence on POF polyolefin heat shrink film products, bring new profit growth points to the company's long-term development, and form a good situation where the two main products of high-performance functional polypropylene film and POF polyolefin heat-shrinkable film are jointly developed, which is conducive to strengthening the company's core competitiveness in future development and enhancing the company's sustainable development capabilities. Long-term performance has had a significant positive impact. It is proposed to raise 120,000 tons of thermoplastic elastomer materials for a wide range of product applications. In December 2015, the company announced a non-public development plan. It plans to raise no more than 400 million yuan to invest in the construction of a thermoplastic elastomer project with an annual output of 120,000 tons. The construction period of the project is 1.5 years, and it is expected to be ready for use in June 2017. The thermoplastic elastomer materials developed and produced by the company successfully realized the production of TPE precursors and elastomer polarization, etc., so that on the basis of ensuring good oil filling performance, the product has good heat resistance, oil and wear resistance of nylon, greatly reducing the unit cost of TPAE materials, and achieving adjustable hardness, and greatly expanding the application fields of TPAE materials. It can be widely used in the production and processing of products in various fields such as halogen-free flame retardant charging pile cables, heat-resistant and oil-resistant household equipment packaging materials, automotive oil- and heat-resistant conduits, high-strength heat-resistant sports shoes, high-temperature resistant cooking and disinfection medical sealing materials, etc., and has very good development prospects. Profit forecasting and investment advice. We expect the company's net profit attributable to the parent company in 2016-2018 to be 9053 million yuan, 134 million yuan, and 172 million yuan, respectively, up 33.57%, 47.74%, and 28.47% year-on-year; the corresponding EPS is 0.10 yuan, 0.15 yuan, and 0.19 yuan respectively. The company is a leading company in the POF heat shrink film field, but since the current stock price of the company is 194 times PE in 2016, which is higher than the industry valuation of the rubber and plastic products industry to which the company belongs, there is no rating for the first time. Risk warning. The risk that the construction of a new project falls short of expectations; the risk of large fluctuations in raw material prices.