Investment highlights: 2017H1 performance increased 124.12% year over year. In 2017H1, the company achieved revenue of 6.049 billion yuan, an increase of 212.45% over the previous year; net profit of the mother was 234 million yuan, an increase of 124.12% over the previous year. Among them, revenue from pesticides and intermediates was 2,366 billion yuan, up 65.56% year on year; petrochemical warehousing, transportation and trade revenue was 3.613 billion yuan, up 795.70% year on year; and revenue from grain seeds and other business was 5.366 million yuan, down 45.29% year on year. The sharp increase in performance was mainly due to the obvious recovery of the pesticide industry as a whole, while the pharmaceutical and warehousing business exploded. The company expects net profit for January-September to be 323-393 million yuan, an increase of 130%-180% over the previous year. The pesticide market is booming, and the implementation of new policies favors industry integration. Since the second half of 2016, international crude oil prices have rebounded steadily. Coupled with the inventory replenishment cycle of international agrochemical giants, which has led to a recovery in overseas demand, pesticide market prosperity has rebounded. Combined with factors such as stricter domestic environmental protection inspections and the cessation of production restrictions by enterprises, the overall trend of pesticide recovery is obvious. According to data from the China Pesticide Industry Association, the pesticide price index continued to rise to 83.62 in May, an increase of 0.71% over the previous month and 19.87% over the previous year. Furthermore, the implementation of five new “Pesticide Management Regulations” supporting regulations, including the “Administrative Measures on Pesticide Registration” on August 1, will significantly raise the industry threshold, eliminate backward production capacity, and improve product prices. Leading companies such as Huifeng are expected to benefit from them. The advantages of original drug products are obvious, and pesticide innovation has achieved remarkable results. The company is the leading pesticide drug in China. It has 6,800 tons of misinamide, 7,000 tons of capryloyl bromobenzonitrile, 1,200 tons of fluconazole, and 18,000 tons of formulation production capacity. Among them, misinamide has the highest production capacity of the original drug in the world, capryl bromobenzonitrile is number one in the country, and second in the world. The company has advanced environmental protection technology, and has always been committed to pesticide innovation, actively developing pesticide raw materials and pharmaceutical products with independent intellectual property rights. In the first half of the year, the company applied for a total of 21 invention patents, 14 PCT patents, obtained 6 domestically authorized invention patents, and 5 invention patents authorized in the US, Australia and other countries. The warehousing business exploded, contributing significantly to revenue. The company is building a 308,000 square meter petrochemical storage project based on Dafeng Port. Currently, the first phase of 148,000 square meters has entered the normal operation stage, contributing significantly to revenue. The 17H1 warehousing business accounted for 59.73%, compared to 20.84% in the same period last year, a significant increase. In the future, the company will actively utilize the advantages of the marketing network and improve logistics efficiency and profitability through electronic distribution of terminal products. With the release of new production capacity, performance is expected to double. In April 2016, the company's fund-raising for the construction of 5,000 tons of ammonium phosphine, 1000 tons of anti-invert ester, and 2000 tons of methoxyphenyl hydrazide was gradually implemented, becoming a new profit growth point. Among them, the anti-invert ester project was put into operation at the end of 2016; the ammonium oxate project entered the commissioning stage in the second quarter of this year. The domestic single unit has the largest production capacity, with advantages in scale and cost. The company expects that the commissioning of all three projects will bring about 440 million yuan in profit contributions, and the future performance of the entire industry is expected to double. Profit forecast. We expect the company's net profit in 17-19 to be 421, 5.29, and 652 million yuan, corresponding to EPS of 0.28, 0.35, and 0.43 yuan respectively. Considering the company's rapid growth, we gave it a PE of 25 times higher than the industry average in 2017, with a target price of 7.0 yuan, and a purchase rating of 7.0 yuan. Risk warning: pesticide prices have declined; the commissioning of new projects has fallen short of expectations.