Matters: The company announced today its performance forecast for the first quarter of '17. It is estimated to have a profit of 250-280 million yuan, an increase of 58%-77% over the previous year. The new production of 10,000 tons of Diecao Express, 10,000 tons of VB3, and 25,000 tons of pyridine was put into operation. One test run was successful, and the progress exceeded expectations. Key points 1. The production schedule of Hibacao, VB3, and pyridine exceeded expectations, and the introduction of new production capacity disrupted the industry pattern. The company originally had 2,000 tons of red grass fast, and the new 10,000 tons of biochemical red grass improved process. The cost is expected to be reduced by 15%-20% compared to the old production capacity. Enemicot can effectively fill the market gap caused by the domestic ban on paraquat. Demand is growing rapidly, and prices have remained high at 145,000 yuan/ton recently. The company originally had 10,000 tons of VB3, and now 10,000 tons of VB3 have been added; after the new pyridine base production line is put into production, 3 methylpyridine can still meet its own VB3 production capacity, and can also be sold externally. The recent launch of VB3 by Brother Technology and Red Sun caused short-term pressure on prices, falling back to 43,000 yuan/ton from 50,000 yuan/ton in the previous period. However, the combined market share of the two companies was over 40%, greatly increasing their control over the market. 2. Recently, the price of chlorpyrifos has continued to rise. The company has maintained a high level of chlorpyrifos production capacity of 15,000 tons and has intermediates such as ethyl chloride. Recently, the price of chlorpyrifos has risen 4000-5,000 yuan/ton to 45,000 yuan/ton compared to the beginning of the year. The company's paraquat was discounted at more than 20,000 tons, and the price of 40% paraquat mother liquor remained high at 22,000 yuan/ton. 3. There is no fear of paraquat being banned. The rich product chain helped the company take off. The decline in demand caused by the domestic ban on paraquat agents in 2016 has been digested by the market. Because of its irreplaceable nature, global sales are expected to remain stable over the next three years. After the company's merger and acquisition of Kexin in '17, the competitive pattern in the paraquat industry improved dramatically, and the resulting price elasticity drove a sharp increase in the company's performance. At the same time, the company launched Enemy Fast to replace Paraquat, ensuring the sustainability of long-term development. In the next few years, the company will launch a number of major products such as ammonium phosphine and pyrazole ether mycelium, etc., and will continue to enrich the downstream product line based on the card position advantages of pyridine base. The gradual enrichment of the product echelon over the next few years will help the company take off. 4. Investment suggestions: We have long been optimistic about the company's card position advantage in the pyridine field and the clear growth brought about by rich follow-up product reserves. For details, please refer to our in-depth company report released earlier. The company's net profit for 17-19 is estimated to be 7, 9.4, and 1.1 billion yuan, corresponding to EPS 1.2, 1.6, and 1.89, respectively. The current stock price corresponds to PE16X, 12X, and 10X, maintaining the “recommended” rating. 5. Risk warning: Sales of new production capacity fell short of expectations, and the price of VB3 fell sharply.