Investment highlights: The performance of the first three quarters increased by 27.65%. In the first three quarters of 2017, the company achieved revenue of 1,065 million yuan, an increase of 6.25% over the previous year, and realized imputed net profit of 166 million yuan, an increase of 27.65% over the previous year. Based on this estimate, revenue for the third quarter was 331 million yuan, down 1.10% year on year; imputed net profit was 53.11 million yuan, up 33.44% year on year. The main reasons for the increase in performance were the increase in product gross margin during the reporting period and the reduction of the corporate income tax rate from 25% to 15% due to the acquisition of the “High-tech Enterprise Certificate” by the subsidiary Suli Chemical. The boom in biocidal products is improving, and production capacity release performance growth is guaranteed. Affected by the shutdown of the production facilities of some foreign manufacturers of Baibaqin, the supply of Baibaqin has basically been in short supply in recent years. Since the synthesis process and equipment for the original medicine of Baijiacin are quite unique, it is not possible to share equipment with other pesticide products, so the actual main domestic manufacturers are Hebei Xinhe (20,000 tons of production capacity), Shanghai Taihe (10,000 tons production capacity), and Viunat (2,000 tons of production capacity). This year, due to environmental inspections, the supply of promycin is tight. Zhuochuang News shows that the latest price has risen to 45,000 yuan/ton, an increase of 32% from the beginning of the year. The price of pyrimidine, another main product of the company, has also risen sharply due to insufficient supply of the upstream raw material salicylnitrile. According to Zhuochuang News, the current price is 310,000 yuan/ton, up 72% from the beginning of the year. Currently, there is still room for improvement in the company's capacity utilization rate. In the future, sales volume released from production capacity is expected to grow rapidly, becoming the main driving force for performance growth. Decabromodiphenyl ethylene is a leading flame retardant company, and demand in the downstream market is strong. As market demand for plastic products expands, domestic consumption of flame retardants has risen sharply. In the first three quarters of 2017, the company's flame retardants and flame retardant intermediates achieved sales revenue of 230 million yuan, accounting for 21.6% of revenue. The company is the first company in China to produce decabromodiphenyl ethylene flame retardants. At the same time, it also supports the self-produced intermediate diphenylethane, and the industrial chain layout is perfect. Since this year, the market supply of the upstream raw material bromine has been tightened due to the country's “restructuring and removal of production capacity” and increased efforts to improve environmental protection. The average purchase price of bromine increased 13.33% over the same period last year, driving the price up 8.61%. Fund-raising projects are progressing in an orderly manner, and the company's performance is expected to reach another level. The company initially raised capital for the construction of 1000 tons of pyrimidine raw materials, 10,000 tons of pesticide formulations, 9,000 tons of pesticide formulations, annual production of 9,000 tons of pesticide formulation products, annual production of 2,500 tons of melamine polyphosphate, 10,000 tons of compound flame retardant masterbatch, and Shanghai R&D laboratory projects. We expect that the production capacity of pyrimidine drug will be released in 2018, achieving an average annual revenue of 200 million yuan. After pesticide formulations, melamine polyphosphate, and compound flame retardant masterbatches are gradually put into production, they can bring the company an average annual revenue of 1.24 billion yuan. The revenue and profit scale of a company with full production capacity is expected to double. Profit forecasts and investment advice. We expect the company's 2017-2019 EPS to be 1.54 yuan, 1.81 yuan, and 2.07 yuan respectively, corresponding to the current PE valuation of 23 times that of 2017, with a target price of 35.42 yuan, giving it an “increase in holdings” rating. Risk warning. Risk of price fluctuations of raw materials, risk of fluctuations in product prices.