Event: The company released its 2017 annual report. In 2017, the company achieved operating income of 1,828 billion yuan, an increase of 29.35% over the previous year, and net profit attributable to shareholders of listed companies of 124 million yuan, a year-on-year decrease of 26.33%, and net profit after deducting 120 million yuan from non-return parents, a year-on-year decrease of 25.22%. Equivalent basic earnings per share of 0.14 yuan/share, a year-on-year decrease of 30%. Among them, in the fourth quarter, the company achieved operating income of 545 million yuan, an increase of 18.80% over the previous year, and net profit of 42 million yuan, a year-on-year decrease of 31.71%. Comment: The volume and price of resin products have risen sharply, and the high-end equipment manufacturing sector is growing rapidly. The company develops with a two-wheel drive of “new chemical materials+high-end equipment manufacturing”. The new chemical materials sector is mainly engaged in polyester resin products for powder coatings, with a production capacity of 150,000 tons/year. In 2017, the company's polyester resin sales volume increased 5.04% year on year to 133,300 tons. Outdoor resin and mixed resin revenue increased 29.54% and 23.57% year on year, respectively, to 11.66 million yuan and 366 million yuan. However, due to product price increases lagging behind price increases of raw materials such as NPG and PTA, the gross margin of outdoor resins fell 9.97 ppt to 11.75% year on year, and the gross profit margin of mixed resins was 21.93%, which is basically the same as the previous year. With the decline in NPG prices in the fourth quarter, the company's gross margin in the fourth quarter has rebounded, with a month-on-month increase of 4.93 ppt to 21.69%. In the high-end equipment manufacturing sector, the company achieved revenue of 285 million yuan in 2017, an increase of 43.07% over the previous year, and a gross profit margin of 46.94%, an increase of 3.79 ppt over the previous year. Raw material prices have declined, and NPG and resin production expansion projects will be put into operation one after another. Prices of NPG and PTA, the company's main raw materials, have now declined somewhat. The latest price of domestic NPG in East China is 12,600 yuan/ton, down 24% from the high of 16,500 yuan/ton in September '17; PTA prices have also shown signs of a slight decline, and the latest price in East China is 5,468 yuan/ton. The company currently has a polyester resin production capacity of 150,000 tons, far surpassing competitors and ranking first in market share. The subsidiary Huangshan Excalibur's polyester resin project with an annual output of 50,000 tons is expected to be put into operation in June 2018, and the 40,000 ton polyester resin project in Spain and the European R&D center project are expected to be put into operation from the end of 2018 to 2019, and product sales are expected to increase further. In terms of raw materials, the Lihuayi Excalibur NPG project with an annual output of 30,000 tons has already been put into operation, and the Anshan Excalibur NPG project with an annual output of 40,000 tons is expected to be put into operation by the end of 2018. The supply of raw materials will be effectively guaranteed, and the company's ability to withstand the risk of price fluctuations in the industry has greatly improved. The high-end equipment manufacturing sector continues to enrich, and Jiaye Airlines has fulfilled its performance promise. On the basis of developing the polyester resin business with traditional advantages, the company has continued to enrich the high-end equipment manufacturing sector in recent years. Jiaye Airlines, which was acquired in 2015, specializes in high-end equipment manufacturing in the fields of aviation, aerospace and rail transit. It has a national military standard quality management system certification, a weapons equipment research and production license, and a three-level confidential qualification. In 2017, Jiaye Airlines achieved net profit of 593.483 million yuan after deducting non-return from the mother, fulfilling its performance promise. At the same time, the main business scope of Shenjian Yuchang, a wholly-owned subsidiary, has increased the aviation, aerospace and rail transit business areas. Within 18 years, some of the machining processes of Jiaye Aviation's rail transit sector will be implemented in Yuchang, which will help Xi'an Jiaye's existing business to expand and strengthen rapidly, while gradually entering other related industries in the high-end equipment manufacturing field to achieve the strategic goal of the company's dual main business development. Acquired 60% of Zhongxing Weiye's layout and navigation business. In May '17, Jiaye Airlines, a wholly-owned subsidiary, acquired 60% of Zhongxing Weiye's shares with 127.8 million yuan. Zhongxing Weiye's business is dominated by the development of satellite positioning systems and modules, and is supported by navigation control systems. The Beidou satellite communication navigation terminals produced are mostly assembled in some of the Navy's weapons and equipment, and have four military licenses and second-level security qualifications. This acquisition is conducive to filling up the shortcomings of Jiaye Airlines in related business. It has achieved orderly and rapid expansion of its business, leveraging synergies, and expanding the “high-end equipment manufacturing” sector. Zhongxing Weiye merged in June and achieved revenue of 29.1529 million yuan and net profit of 13.3767 million yuan in 2017. Profit forecast and rating: We expect the company's operating revenue in 2018-2020 to reach 2,389 billion yuan, 3.186 billion yuan and 3.888 billion yuan respectively, up 30.70%, 33.36% and 19.53% year on year, net profit of $218 million, 342 million yuan and 452 million yuan respectively, up 75.36%, 56.71% and 32.18% year on year, and EPS of $0.25, 0.40 and 0.52 yuan respectively, corresponding to April 11, 2018 The dynamic PE of the closing price (4.99 yuan/share) was 20 times, 13 times, and 10 times, respectively, maintaining the “increase in holdings” rating. Risk factors: Fluctuations in raw material prices, new production capacity falling short of expectations, and development of the high-end equipment manufacturing sector falling short of expectations.