Performance summary: In the first three quarters of 2018, the company achieved operating income of 1.2 billion yuan, a year-on-year increase of 13.0%; net profit of 230 million yuan, an increase of 36.8%; net profit of 220 million yuan after deduction, a year-on-year increase of 36.2%; net cash flow from operating activities of 3.4 billion yuan, a year-on-year increase of 41.2%; EPS of 1.26 yuan, and an ROE of 14.2%. Pesticide sales in the third quarter were slightly lower than expected, and gross margin declined in the third quarter. The company's sales volume of pesticides and pesticide intermediates in the third quarter was 4,601.5 tons, slightly lower than our expectations, and 5056.4 tons in the same period last year. However, sales of flame retardants and other fine chemicals did not change much year-on-year and still increased slightly. Therefore, the company's revenue share changed somewhat in the third quarter. Since the gross margin level of pesticides was higher than that of flame retardants and other fine chemicals, the gross margin level declined in the single quarter. If the company's pesticide sales pick up in the fourth quarter, it is expected that the gross margin level will also recover in the fourth quarter. The production capacity of the promycin industry is expanding. Currently, prices are still rising, so the future is cautious. Currently, Xinhe is expanding its production capacity. Although the price of promycin products is still in an upward channel and the profitability is very good, considering that the overall demand in the industry is basically stabilizing, the introduction of new production capacity will have a certain impact on future prices, so we are more cautious about the future. The fund-raising project will soon be put into operation, bringing new growth momentum and challenges. Several IPO fund-raising projects are gradually being completed. Among them, the production capacity of 1,000 tons of pyrimidine will be put into operation in June 2018, 1,500 tons of melamine polyphosphate and 10,000 tons of compound masterbatch will be put into operation at the end of 2018, and the construction of the 9,000-ton pesticide formulation product technical improvement project is expected to be completed in December 2019. However, since the gross margin of the company's flame retardant products is lower than that of pesticide products, future changes in the company's product revenue structure will have a certain impact on gross margin. How to ensure a high level of profitability and high growth in revenue levels in the future will be a challenge facing the company. Earnings forecasts and ratings. The EPS for 2018-2020 is expected to be 1.61 yuan, 2.09 yuan, and 2.43 yuan respectively, and net profit from the mother will maintain a compound growth rate of 25% over the next three years. Considering the current overall valuation level of the industry, the investment rating was lowered to “increased holdings.” Risk warning: safety and environmental risk, major product price change risk, raw material price change risk, capital raising investment project risk, exchange rate change risk.