Key investment events: The company released its 2017 semi-annual report and foreign investment announcement. First-half performance increased sharply year on year, but second-quarter results and viscose staple fiber profitability fell short of expectations. In the first half of this year, the company achieved operating income of 1,869 billion yuan, a year-on-year increase of 11.64%, net profit of 488.777 million yuan, a year-on-year increase of 44.65%, net profit of 46.5549 million yuan after deducting non-return net profit of 46.5549 million yuan, an increase of 63.50% over the previous year, and an EPS of 0.04 yuan. The company produced 62,600 tons of viscose in the first half of this year, including 22,600 tons of viscose filament, 40,000 tons of viscose staple fiber, and 26,500 tons of spandex. Looking at a single quarter, the company's net profit for the second quarter of this year was only 2,8604 million yuan, which was lower than expected. Among them, due to falling product prices, asset impairment losses were estimated at 20.073 million yuan, and viscose staple fiber's gross margin for the first half of this year was only 5.17%, lower than our expectations. We think it may be related to the three technical reforms carried out by the company in the first half of this year. Continue to increase fixed asset investment in chemical fiber. In addition to the 20,000 tons of spandex production capacity that was put into production at the beginning of this year, the company continues to increase its chemical fiber capacity. In February of this year, the board of directors of the company deliberated and passed a bill to implement the first phase of the ultra-fine denier spandex fiber project with an annual output of 3*20,000 tons. The total investment of the project is 1 billion yuan. The planned construction period is from February 2017 to June 2018. This year, the company's board of directors deliberated and passed a bill to implement a new cellulose filament project with an annual output of 10,000 tons. The project construction site is located in Xinxiang Economic and Technological Development Zone, with a total investment of 887.31 million yuan. The planned construction period is from May 2017 to May 2018. Foreign investment to promote the industrialization of photochromic materials in China. The board of directors of the company passed a bill on August 9 and decided to jointly invest and form “Tianjin Fuxin Sunshine Technology Co., Ltd.” with Tianjin Fuxin Technology Co., Ltd., Tianjin Fuxinda Optoelectronic Technology Co., Ltd., and Tianjin Shenfeng Technology Development Co., Ltd. The company invested 43.5 million yuan in cash, accounting for 31.73% of the joint venture's shares. Tianjin Fuxin Technology Co., Ltd. and its subsidiary Tianjin Fuxinda Optoelectronics Technology Co., Ltd. have been committed to the research and development of photochromic materials for many years. They own all independent intellectual property rights for photochromic materials, and their technical strength is in a leading position in the world. Currently, they are the only manufacturer of photochromic materials in China. After the establishment of the new joint venture, Tianjin Fuxin and Tianjin Fuxinda will inject all intellectual property rights and intangible assets related to photochromic materials into the new company, and promised not to engage in any commercial activity that competes with the new company. After the establishment of the new company, it will focus on the R&D of photochromic technology and application technology solutions, and drive product innovation and upgrading in related domestic industries through R&D investment in photochromic technology. The establishment of the new company will greatly promote the process of industrialization of photochromic materials in China, fill the gap in large-scale domestic production of photochromic materials, and enable China to have independent production capacity for photochromic materials, which is of great practical significance. Photochromic materials are widely used and have good prospects. Photochromism refers to the phenomenon that compound A can produce a product B with different structure and spectral properties through a specific chemical reaction when exposed to light with a wavelength of lambda, while B can also reversibly form compound A under the influence of light or heat with a wavelength of '. Photochromic materials are divided into T types due to temperature and P types due to light radiation. Photochromic materials can be applied to: 1) information storage elements; 2) decorative and protective packaging materials; 3) self-imaging holographic recording photography; and 4) national defense purposes. Profit forecasts and investment advice. We are not considering the impact of photochromic materials on the company's future performance yet. It is estimated that the 2017-2019 EPS will be 0.15 yuan, 0.19 yuan, and 0.25 yuan respectively, covering the first time, and giving it an “increase in holdings” rating. Risk warning: The price of raw materials or products may fluctuate greatly; the target project of foreign investment is a technological innovation project, and there are certain market risks and business risks.