Matters: The company released its performance forecast for the first quarter of 2018 on February 9, 2018. It is expected to achieve net profit attributable to shareholders of listed companies of 250 million yuan to 280 million yuan, an increase of 58.21% to 77.19% over the previous year; and achieve basic earnings per share of 0.43 to 0.482 yuan. Our comments on this are as follows: Comment: The benefits are clear on the supply side, the company's market share has increased, and product prices have risen. Since 2017, strict supply-side and environment-related supervision attitudes have become the new normal in the pesticide industry. Against this background, the company, as a leading enterprise that is more standardized in the industry and has invested a lot in environmental protection and sewage treatment in the early stages, while ensuring that its own production capacity is not limited, has benefited to a large extent from the price increase of related products. As of February 9, 2018, the prices of the company's main products, such as pyridine, 3-methylpyridine, VB3, paraquat, dimethoxam, and chlorpyridine, etc., have all increased significantly. Among them, the prices of paraquat, pyridine, and 3-methylpyridine have increased by 74.67%, 50% and 20% respectively compared to the beginning of 2017. Due to the company's relatively complete industrial chain and high self-sufficiency rate, the increase in product prices directly contributed to a significant increase in the company's profit level. Furthermore, due to the clear supply end of the industry, the company's market share has been greatly increased, and there is huge room for profitability to increase. With the acquisition of Ruralco and implementation of strategies such as “biotechnology+big data”, there is sufficient momentum for horizontal and vertical growth. Ruralco (60% of the shares) acquired by the company is a distributor of FMC (one of the world's important pesticide companies) in Argentina (the world's leading pesticide investment country). It is mainly engaged in agrochemical distribution. Through this, the company hopes to accelerate the global sales channel layout and brand marketing pace, and further promote its vertical expansion from the manufacturing side to the market side. Furthermore, the company successfully used the innovative practice of “biotechnology+big data” to promote the continuous improvement of the industrial chain layout. At the same time, the company completed the acquisition of Shandong Kexin. On the one hand, it responded to the industry's “innovation, upgrading, expansion and strengthening” direction, and on the other hand, it is also steadily promoting its own horizontal expansion and layout. We believe that in the next three years, the company will continue to use and promote horizontal and vertical layout to achieve rapid growth in terms of quality and quantity. In the context of strict environmental protection, the pyridine industry chain still has a lot of room for growth. The company has always focused 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 - paraquat gum product chain; 5) pyridine-bipyridine-dimethylene chloride product chain; 6) pyridine-pyridine chloride product chain; 7) polymethylpyridine chloride product chain; 7) waste water recycling polymethylpyridine product chain. Under the current new normal of strict environmental protection, on the one hand, the company will continue to use cost and raw material advantages to build an integrated upstream and downstream circular economy industrial chain of pyridine to continue the rapid growth in sales revenue and profit; on the other hand, severe supply-side restrictions will further drive away backwardness and irregular production capacity within the industry, and the company's market share is expected to increase further. We believe that taking advantage of this industry opportunity, it is expected that the pyridine industry chain, which accounts for the vast majority of the main business, will continue to drive a sharp increase in the company's performance. risk factors. Paraquat gels have been banned; development of new products downstream of the pyridine industry chain has been 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, maintaining the target price of 30 yuan, maintaining the “buy” rating.