Key investment performance summary: The company achieved operating income of 1,457 billion yuan in 2017, an increase of 7.85% over the previous year; realized net profit of 225 million yuan, an increase of 21.23% over the previous year; and EPS of 1.50 yuan. The company is number one in the probiotics industry and has outstanding competitiveness. The company's business is mainly divided into pesticides and flame retardants. Pesticide products are mainly prothiacil, pyrimidine and other products. Among them, the production capacity of protisol is the highest in the world. Flame retardants mainly include decabromodiphenyl ethane, flame retardant masterbatches and other flame retardant products. The company's main varieties of pesticides and flame retardants all have relatively complete intermediate self-supporting capabilities and outstanding competitiveness. There is a large correlation between the increase in profit in 2017 and the increase in product prices. In the future, we should still pay attention to changes in the prices of related varieties. The unit price of the company's pesticides and pesticide intermediates increased 9.45% year on year in 2017, and the price of flame retardants and intermediates increased 12.72% year on year. In terms of sales, due to maintenance, pesticide sales declined slightly year on year in 2017. The company's gross margin increased significantly, and the gross margin of the two major business segments of pesticides and flame retardants increased. However, since product prices were rising all the way up in 2017, and the company also had some long orders, we found that there was a certain gap between the increase in the sales price of the company's products in 2017 and the increase in the market price of the product, showing a certain lag. Therefore, we expect that in 2018, with the gradual digestion of previous orders, order prices for some of the company's products that have continued to rise in price are expected to increase, while order prices for other products that are currently falling in price may be difficult to improve. The fund-raising project is about to be put into operation, bringing new momentum for growth. According to the disclosure of the company's annual report, several IPO fundraising projects will gradually come to an end in 2018. Among them, 1,000 tons of pyrimidine production capacity will be put into operation in June 2018, and 6,500 tons of pesticide formulations, 1,500 tons of melamine polyphosphate, and 10,000 tons of compound masterbatch will be put into operation by the end of 2018. Profit forecasting and ratings. EPS is expected to be 1.92 yuan, 2.50 yuan, and 2.90 yuan respectively in 2018-2020, and net profit returned to mother will maintain a compound growth rate of 25% over the next three years. Considering Shenwan's price-earnings ratio of 16.86 times in 2018, the company is an industry leader and has outstanding growth, so the company was given a valuation of 20 times that of 2018, corresponding to a target price of 38.40 yuan. For the first time, coverage was given, and a “buy” rating was given. Risk warning: safety and environmental risk, risk of price changes of major products, risk of changes in raw material prices, risk of capital raising investment projects, risk of exchange rate changes.