Matters: The company released the 2017 annual performance report on January 29, 2018. This year, the company achieved operating income of 4.980 billion yuan, +40.79% year-on-year; net profit of 702 million yuan, +455.47% year-on-year. In addition, the company also announced plans to acquire 60% of Argentina's shares in Ruralco to expand overseas channels. Comment: The company's net profit in 2017 was 702 million yuan, an increase of 455.47% over the previous year. The company is one of the pesticide companies we have recommended since August 2016. The changes in the company's industry are basically in line with our predictions in our previous report, and the performance growth in 2017 is also in line with our expectations. The improvement in the company's performance was mainly due to the new normal of major products after the supply-side pattern was reshaped. As of January 29, 2018, the prices of the company's main products, pyridine and paraquat, have increased by 50.00% and 36.36% respectively since the beginning of 2017, and the prices of other products such as VB3 and 3-methylpyridine have also increased significantly. We believe that for a long time to come, the company will continue to use its concept of “green development, environmental protection first” to maintain its leading advantage and increase its profit level in the context of continuous pressure on the supply side of contraction and superposition. Acquire 60% of Ruralco's shares to accelerate its entry into the global agrochemical stage. The company's plan to acquire 60% of Ruralco's shares is carried out in two steps: 1) to acquire 26.6667% of shares with its own capital of 8 million US dollars; 2) to increase capital and expand shares with 15 million US dollars of physical products to obtain 33.3333% of shares; after completion of the two steps, the company will hold a total of 60% of the shares. Ruralco is a distributor of FMC (one of the world's important pesticide companies) in Argentina (a major pesticide input country in the world). It is mainly engaged in agrochemical distribution. The company currently has 37 exclusive maintenance customers obtained from FMC, and has 33 product registration certificates or obtained permission to use registration certificates. The company's total assets are 101,881.06 million Argentine pesos, and net profit is 9.4554 million Argentine pesos (1 Argentine peso = 0.33 yuan). The strategic significance of the transaction exceeds the merger of profits. It is not only conducive to accelerating the company's global sales channel layout and brand marketing pace, but also to further promoting the expansion of the company's industrial structure from the manufacturing side to the market side. The pyridine industry chain is continuously optimized, and future development continues to be promising. The company's innovation and transformation has been successfully implemented. Through the innovation, transformation and upgrading of a series of measures to transform traditional industries using biotechnology+big data, the company has not only successfully created an internationally leading “top ten” product chain ecosystem with biotechnology+big data as the core, but also pioneered the transformation from traditional chemical pesticides to biochemical engineering agriculture (biochemical environmental pesticides, biochemical animal nutrition) industrial ecosystem in the same industry in China. The company focuses on building seven downstream product chains of pyridine alkali: 1) 3-methylpyridine-VB3 product chain; 2) 3-methylpyridine chloride (CCMP) product chain; 3) 3-methylpyridine fluorochloride product chain; 4) pyridine-paraquat-paraquat agent product chain; 5) pyridine-bipyridine-dimethyridine rapid product chain; 6) pyridine-pyridine chloride product chain; 7) waste water recycling polymethylpyridine product chain. The seven major product chains go hand in hand, using cost and raw material advantages to build an integrated upstream and downstream circular economy industrial chain for pyridine. It is expected that the sales revenue and profit of the industrial chain will grow rapidly in the next few years. risk factors. Paraquat glue was banned; development of new products downstream of the pyridine industry chain was blocked. Earnings forecasts and ratings. Considering that paraquat has entered a boom cycle, the price of VB3 continues to rise; pyridine production capacity has been greatly squeezed due to environmental inspections, and the supply and demand pattern continues to improve; maintaining the company's 2018/19 net profit forecast of 1,099/1,198 billion yuan, corresponding to EPS of 1.89/2.06 yuan, respectively, maintaining the target price and maintaining the “buy” rating.