A leading domestic daily chemical company with a focus on care products. The company's products cover the fields of hair care, bath cleaning, skin care, oral care, etc., and has a brand gradient layout composed of the core brand “Lafang”, the key brand “Yujie”, the strategic brand “Medos” and many extended brands. Relying on stable distribution channel advantages, the company accelerates the layout of supermarkets and e-commerce channels, forming multi-dimensional channel collaboration. The company went public on March 13, 2017. The actual controller and co-actors held a total of 60.6% of the shares, completed a 0.67% equity incentive in September 2017. The exercise corresponds to the 2017-20 net profit CAGR of 21.6%, and the exercise price of 25.1 yuan is higher than the safety margin of the current price. The company's revenue and net profit CAGR for 2012-17 were 5.5% and 11.5%, respectively, growing steadily. Both revenue and net profit continued to grow in 2012-16. In 2017, revenue was 981 million yuan and net profit was 138 million yuan, down slightly by 6.5% and 7.6%, respectively. The company's product upgrade and channel transformation brought about both increases in gross margin and period expense ratio, and net profit margin increased from 13.5% in 2014 to 14.1% in 2017. Consumption upgrades guarantee industry growth, and brand & channel building core competitiveness. The penetration rate of major categories in China's nursing care industry is already high, but: (1) the material base of residents continues to improve, and increased hygiene and image awareness has led to an expansion of market demand for personal care products; (2) the rich product categories, consumption timing and segmentation functions of daily chemical manufacturers have driven the industry's volume and price increases; (3) the decline in sales channel optimization has brought about increased demand from low-tier cities. In terms of brands, brands play an important role when Chinese people buy daily chemical products. Foreign brands occupy the main market share in various domestic chemical categories, but the competitiveness of domestic brands is gradually increasing, and there is broad scope for substitution. In terms of channels, convenience stores, franchise stores, e-commerce platforms, etc. show great advantages in terms of convenience, professionalism, and cost. The channel structure of the daily chemical industry is undergoing major adjustments, and emerging channels are showing strong growth momentum. The dual dimension of “gradient+promotion” enhances brand value. The company “Lafon”, “Yu Jie”, “Medos” and many extended brands form a gradient layout from various angles such as categories and segmentation functions, complementing each other's strengths. At the same time, their brand promotion is stronger than their peers, deepening their layout on TV, the Internet, offline activities, and endorsement stars. In the past three years, advertising and promotion revenue accounted for 14.0%, 13.8%, and 12.1%. Distribution channels build a moat, and supermarket & e-commerce channels open up incremental space. The company also used distribution, supermarkets, and e-commerce channels to establish a national sales network covering 31 provinces and cities across the country, accounting for 64%, 27%, and 9% of revenue in 2017, respectively. The distribution channel is the company's revenue guarantee, and is also opening up incremental space in low-tier cities and northern markets. The revenue of core dealers with stable partnerships with the company accounts for more than 90% of the total revenue of the distribution channel; supermarket channels such as hypermarkets and franchise stores are the company's key layout channels and are expected to become a source of future growth in performance. 2017 revenue accounts for an increase of more than 10 percentage points compared to 2014; e-commerce channels are the company's strategic channels, and are expected to increase performance in the future. It also helps distribution and supermarket channel sales in terms of operation. At the same time, the company invested 20% in Suqian Baibao and 26.8% of Makeup Information to increase self-media social e-commerce and enter the beauty field, achieving industry chain collaboration and is expected to further enhance the company's overall business capacity and profitability. Earnings forecasts and valuations. Revenue for 2018-20 is estimated at 11.2 billion, 12.5 billion yuan, and 1.38 billion yuan, up 14.1%, 11.2%, and 10.6% year on year; imputed net profit is 1.8, 220 million yuan, and 250 million yuan, respectively, up 31.3%, 19.2%, and 17.3% year on year. Referring to comparable valuations in the industry, 30-35 times PE in 2018, corresponding to the reasonable value range of 23.98-27.98 yuan, an investment rating of “superior to the market” was given for the first time. Risk warning: Fluctuations in raw material prices; supermarket channel expansion is not as effective as expected; cross-regional business risks; uncertainty in investment returns, etc.