Key investment points: The company is a leader in the domestic photoinitiator 907 and thiol compounds segment. The company is mainly engaged in the production and sale of fine chemical materials such as photoinitiators, thiol compounds and derivatives. By the end of 2016, the company's photoinitiator production capacity was 2000 tons/year, and the production capacity of thiol compounds and derivatives reached 2,000 tons/year. The downstream curing industry is developing rapidly, and the demand for photoinitiators is increasing. Photoinitiators are mainly used in light-curing materials, including UV coatings, UV inks, UV adhesives, etc. In 2016, light-curing ink production was 50,400 tons, up 19.06% year on year, and the market size was 2,416 billion yuan, up 7.95% year on year. In terms of light-curing coatings, production reached 74,000 tons in 2016, and the market size reached 3.3 billion yuan, an increase of 9.13% over the previous year. The concentration of the photoinitiator industry has increased markedly. From an international perspective, the photoinitiator industry is basically monopolized by large multinational companies such as BASF, Italian Lamberti, and IGM Resins. With the merger of Lamberti by IGMResins, the concentration of the global photoinitiator industry has further increased. Domestically, there were 17 photoinitiator companies in 2011 and 13 in 2013. After Tianjin Jiuri acquired Changzhou Huatai in 2014, the concentration level further increased. We believe that as domestic environmental requirements for chemical companies gradually become stricter, the photoinitiator industry is expected to further increase its concentration. The company's industrial chain has obvious advantages. Most companies in the photoinitiator industry outsource intermediates for downstream processing, while Yangfan New Materials produces the key intermediate material anisulfide from basic chemical raw materials, and then uses anisulfide to produce photoinitiator 907. The company has carried out strict cost control since raw materials, and the cost advantage is obvious. At the same time, nearly one-third of the high-end photoinitiators have a thiol compound structure. By producing thiol compounds in-house, the company has obvious advantages in product development. Change the fund-raising project to expand the production capacity of photoinitiators and thiol compounds. On April 27, 2018, the company changed the implementation site of the fund-raising project to Alashan Economic Development Zone in Inner Mongolia. The total investment of the first phase was no more than 500 million yuan, mainly for the construction of 29,000 tons of photoinitiators and pharmaceutical intermediates, including the production of TPO, 184, 1173 and other types of photoinitiators and various pharmaceutical intermediates. The company has enriched the variety of photoinitiators through this fund-raising project change, and is also expected to replicate the entire industry chain model of 907 products, thus establishing the company's leading position in the photoinitiator industry. Profit forecasting and investment ratings. We expect the company's EPS in 2018-2020 to be 1.12, 1.52, and 1.84 yuan respectively. Referring to the valuation of comparable companies in the same industry, we believe that the reasonable valuation range is 20-25 times PE in 2019, and the corresponding reasonable value range is 30.4-38 yuan. For the first time, coverage is superior to the market rating. Risk warning. The commissioning of the fund-raising project fell short of expectations; environmental protection fell short of expectations; product prices fell short of expectations; downstream demand fell short of expectations.