Key investment points The penetration rate of offset CTP continues to increase, and flexible CTP accelerates import substitution. The company is the leader in the domestic CTP (Direct Computer Plate Making Machine) market segment. The leading product, offset CTP, has a domestic market share of about 20% and an international market share of about 5%. It is conservatively estimated that the potential penetration rate of domestic offset CTP is still less than 40%, far below the average of 60% to 81% in Europe, America, and Japan. The green and environmentally friendly flexible CTP industry is growing rapidly. Foreign brands occupy 90% of the market share. At the end of 2013, the company took the lead in launching a new product, flexographic CTP, and its market share continued to expand. The “13th Five-Year Plan” digital printing compound growth rate exceeds 30%, and the industrial inkjet printing market has huge potential. The penetration rate of digital printing in China is only 1.5%, far below the global level of 15%, and the “13th Five-Year Plan” compound growth rate exceeds 30%. Among them, industrial inkjet printing technology has many advantages such as high accuracy and good flexibility, and has a wide range of applications from nanoscale items to billboards. Potential fields include textile printing and dyeing, glass jewelry, electronics industry, biotechnology, 3D printing, etc., and is also expanding. The market size of industrial inkjet printheads was nearly 5 billion yuan in 2017, and increased to 11 billion yuan in 2020. Industrial inkjet printheads are the core components of industrial inkjet printing equipment. The domestic market is monopolized by imported products. In 2017, the domestic market demand was about 5 billion yuan, accounting for about 36% of the global market. It is expected to grow rapidly to 11 billion in 2020, and it will continue to grow in the future, so there is huge room for domestic replacement. Profit forecast and valuation: The company will achieve small-batch production of industrial inkjet printheads in the second half of the year, break foreign monopolies and achieve import substitution. Starting in 2018, it is expected that the company's net profit for 2017-2019 will be 0.54/1.1/182 million yuan, and EPS will be 0.67/1.37/2.28 yuan respectively, corresponding to PE 82x/40x/24x, maintaining the “increase in holdings” rating. Risk warning: New product marketing progress is falling short of expectations.