The company is a leader in precision superhard cutting tools. ① It has been nearly 20 years since the establishment of the company and has rapidly developed into a representative enterprise of superhard cutting tools; the company has two wholly-owned subsidiaries to provide them with high-quality R&D services; the company successfully went public in 2017, ushering in new opportunities for development; ② The company has excellent asset quality and has maintained rapid growth. From January to June 2017, operating income and net profit were 88.9939 million yuan and 19.22 million yuan respectively, up 36.89% and 40.66% year-on-year; at the same time, the company's expense ratio and three expense ratios remained low during the period, showing excellent management capabilities. The downstream industry is mainly the photovoltaic and sapphire industry, and the market space is large. ① The company's main products are electroplated diamond wire, the downstream of which is mainly used for cutting hard and brittle materials such as photovoltaic silicon materials and sapphire; the market space for diamond wire depends on the degree to which diamond wire replaces traditional mortar cutting and the development status of the photovoltaic industry and sapphire industry; ② The rapid development of the photovoltaic industry stimulates the expansion of the diamond wire market space. According to estimates, it is estimated that the domestic photovoltaic industry needs about 1,513 billion meters, 6.630 billion meters, and 13.416 billion meters of diamond wire for monocrystalline silicon slicing in 2015-2017; ③ Due to the expansion of the LED lighting market, diamond wire used for sapphire cutting has entered a period of rapid development. According to estimates, it is estimated that domestic sapphire substrates require about 189 million meters, 275 million meters, and 299 million meters of diamond wire in 2015-2017; ④ The market share of domestic manufacturers will gradually increase. As the country's support for related downstream application industries gradually increases, more domestic manufacturers will enter the diamond wire industry. At the same time as competition increases, the market share of domestic manufacturers has increased. The core supplier of King Kong wire, the company has a high market position. ① The company's core business, electroplated diamond wire products, ushered in rapid growth. In 2016, electroplated diamond wire sales revenue was 126 million yuan. Due to the reduction in average sales price, the gross margin of the product declined slightly but remained in a relatively stable range; the company's production of electroplated diamond wire products ranked in the top three in the industry; ② the company uses technological innovation as the core growth engine and high investment in R&D; the IPO fund-raising project focuses on consolidating and improving the company's market position in the fields of electroplated diamond wire and diamond grinding wheels; ③ the company maintains close cooperative relationships with many customers, and has a clear competitive advantage in the industry. Investment advice: Net profit due to mother in 2017-2019 is expected to be 0.67, 0.99 and 144 million yuan, respectively, up 78.70%, 47.29% and 44.90% year-on-year. The corresponding EPS is 1.30, 1.92, and 2.78 yuan, respectively, and the corresponding PE is 42.63, 28.94, and 19.98 times, respectively. The company is a representative enterprise of precision superhard cutting tools in China, and is in a leading position in terms of asset quality, product layout, industry advantages, and technical accumulation layout. The company's product structure continues to be optimized and superimposed on the rapid development of downstream industries, and the company is expected to continue to grow rapidly. Give it a highly recommended rating. Risk warning: Product prices are falling; downstream demand is declining.