Incidentally, on October 25, the company released its three-quarter report. Revenue for the first three quarters of 2017 was 1,283 billion yuan, up 34.43% year on year; net profit to mother was 82.5772 million yuan, a decrease of 23.27% year on year. A brief review of the third quarter results is in line with expectations. The rise in raw material costs affects profits. The company is mainly engaged in R&D, production and sales of polyester resin products for powder coatings and their raw materials. It is a professional supplier of polyester resin products for powder coatings in China, and currently has an annual production capacity of 150,000 tons of polyester resins of various types. The company's revenue scale grew steadily, and net profit declined year-on-year due to rising raw material prices. The procurement costs of PTA and NPG for the company's upstream raw materials account for 40%-45% and 35%-40% of the company's main operating costs, respectively. With the further implementation of the national environmental protection policy, the price of upstream raw materials rose rapidly this year. In the process, the price of finished products increased relatively little, causing the company's overall product gross margin to decline. As a result, the revenue scale rose significantly, but net profit declined year-on-year. The leading upstream powder coating company. The only listed company in the industry segment is a leading domestic polyester resin company for powder coatings. It is the only listed company in the industry segment. Currently, its market share is about 27%, ranking first in the industry. The company's products are mainly divided into two categories: outdoor polyester resins and mixed polyester resins. Outdoor products are mainly used in the field of outdoor metal equipment surfaces, including household appliances, building materials, automobiles, agricultural machinery, construction machinery, high-speed guardrails, etc.; hybrid products are mainly used in the field of indoor metal surfaces, including home appliances, furniture, electronic 3C products, etc., and have the advantages of good fluidity and excellent decorative performance. The company has unique energy-saving and environmentally friendly polyester resin formulations and process technology for powder coatings, automated control of double-pot semi-continuous process technology, online negative pressure vacuum sampling and analysis technology, etc. The series of products has long provided supporting services to the world's top two powder coating suppliers, AkzoNobel, DuPont, and high-end customers such as Haier, Gree, Samsung, and LG, and is a professional supplier of raw materials for powder coatings in China. Market demand is steadily increasing. The environmentally friendly coating industry has huge space. Polyester resin is one of the main raw materials for thermosetting powder coatings. The main application fields of powder coatings include home appliances, building materials, furniture, agricultural machinery, construction machinery, electronics 3C, and general industry. Compared with ordinary liquid coatings, the biggest characteristic of powder coatings is that they are solvent-free and have the advantages of environmental protection, corrosion resistance, aging resistance, and excellent decorative properties. Looking at the future development direction of the industry, organic solvent coatings containing toxic volatiles will eventually become history, but demand in the paint industry has always existed and is still growing slowly. As a new environmentally friendly powder and water-soluble paint that does not contain toxic volatiles, it will eventually replace the entire share of traditional paint. Traditional and heavily polluting organic solvent-based coatings are slowly being phased out, falling from nearly 40% in 1995 to 5% in 2016. With the transformation of national policies in 2010 and 2011, the paint industry entered a stage of adjustment, falling to the lowest level of 2.8% in 2011. Since then, the paint industry has maintained a low growth rate of about 5%, but the overall profit growth rate is significantly lower than revenue, mainly because costs have increased significantly, raw materials and labor costs have risen too fast. At the same time, along with the increase in non-toxic and harmless environmental protection requirements, companies in the paint industry have continued to withdraw under increasingly strict environmental protection requirements. Therefore, for leading companies in the powder coating industry, it will further increase their market share. The global environmentally friendly powder coating market volume in 2015 was US$8.71 billion, and the market forecast is a compound annual growth rate of 7.6%. China currently accounts for half of the market, but it is mainly used for exports. Currently, powder coatings in China account for less than 15% of all coatings, which is equivalent to the world average ten years ago (as high as 30% internationally). At the same time, as environmental protection has become more and more strict in recent years, powder coatings are about to usher in a good day of great development. This also indicates that a major reshuffle in China's paint industry has officially begun. Some small and medium-sized enterprises will have to withdraw from the market, concentration will increase rapidly, and the growth rate of leading companies in China's new environmentally friendly paint industry will surpass the world average. As countries and consumers pay attention to environmentally friendly materials, on the one hand, the proportion of powder coatings will increase. On the other hand, the application fields of powder coatings will expand to electronics, automobiles, furniture, etc., and demand for polyester resins will also maintain a certain growth rate. The capital increase and acquisition were successfully completed. The paint and military industry went hand in hand. In April 2017, the company increased the capital of Huangshan Excalibur New Materials Co., Ltd. to raise capital requirements for the project. After the capital increase, the registered capital of Huangshan Excalibur increased from 18.634 million yuan to 53.3311 million yuan. The shareholding ratio of the company that completed the capital increase was 99.61%. At the same time, the company also increased the capital of Maanshan Excalibur New Materials Co., Ltd. to raise capital requirements for the project. After the capital increase, Ma'anshan Excalibur's registered capital was increased from 10 million yuan to 20 million yuan. After completing the capital increase, the shareholding ratio of the company remained unchanged and remained at 100%. Huangshan Excalibur's main business is polyester resin production and sales. Ma'anshan Excalibur's main business is the production and sale of NPG, an upstream raw material for polyester resin. These two capital increases aim to enhance the overall competitiveness of the company's main business. Through the company's investment in the NPG production line for upstream raw materials, the company's plan for controlling the cost of upstream raw materials can be seen. It is expected that these two capital increases will continue to improve the company's future performance. As of May 2017, the company has successively completed acquisitions of Jiaye Airlines and Zhongxing Weiye, and the military sector has expanded in an orderly manner. Following the acquisition of Jiaye Airlines, Jiaye Airlines completed the acquisition of 60% of Zhongxing Weiye's shares with its own capital. Zhongxing Weiye has perfect military quality and a high technical threshold, and the Beidou series products have a strong competitive advantage in their industry. Jiaye Airlines promised net profit not less than 31.5 million, 41 million, and 51 million in 15-17. Both 2015 and 2016 have exceeded their performance promises, and are expected to fulfill their performance promises in 2017. Through the acquisition of Jiaye Airlines and Zhongxing Weiye, the company quickly entered the fields of aerospace high-end equipment manufacturing and rail transit high-end equipment manufacturing with large market space and higher profit levels. Currently, its main customers include China Aviation Aircraft, China Aerospace Science and Technology Group, and CRRC. Profit forecast and investment rating: The environmentally friendly coatings industry is growing rapidly. The paint and military industry go hand in hand to maintain an increase in holdings ratings. As the national environmental protection policy becomes more strict and the environmental costs of powder coating industry companies continue to rise, the entire industry is also in a critical period of transformation and reshuffle. Optimizing the industrial structure, adjusting product direction, and improving market responsiveness and competitiveness are inevitable choices. As the only listed company and leading enterprise in the industry segment, the company's growth rate and competitive advantage of the industry are obvious. Second, while building on its main business, the company is actively participating in the gradual and orderly expansion of its military layout with an industrial layout strategy that goes hand in hand with paint and military industry, and its development prospects are worth looking forward to. The company's net profit from 2017 to 2019 is estimated to be 1.64, 2.08, and 265 million yuan, respectively, with year-on-year increases of -2.96%, 26.83%, and 27.40%, respectively. The corresponding EPS for 17 to 19 was 0.19, 0.24, and 0.31 yuan, respectively. Corresponding to the current stock price PE, it is 33, 26, and 20 times, respectively, maintaining an increase rating.