On the evening of January 8, 2019, the incident company released its 2018 annual results forecast. The net profit for 2018 is expected to be 131-148 million yuan, an increase of 100.89%-126.96% over the previous year. At the same time, the company plans to distribute a cash dividend of RMB 3 to all shareholders for every 10 shares, and increase the share capital by 9 shares for every 10 shares transferred from the capital reserve fund. The short review performance increased significantly year-on-year, with a cash dividend ratio of about 27%, and a relatively high transfer ratio. The company's performance for the first three quarters of 2018 was 107 million yuan. The annual performance of 131-148 million yuan corresponds to 0.24-0.41 million yuan in a single quarter in Q4, a change of -40% -2% month-on-month, and an increase of 39%-138% over 2017 Q4. The company's performance increased sharply year-on-year during the reporting period, mainly due to: ① the rise in product prices; ② the release of pharmaceutical intermediates for thiophthalic compounds; ③ the appreciation of the US dollar led to an increase in exchange earnings and a decrease in interest expenses, and a sharp year-on-year decrease in financial expenses. The median value of the Q4 earnings forecast range declined month-on-month compared to Q3. We think it was mainly due to: ① the sharp depreciation trend of RMB against the US dollar in the Q4 quarter was not continued, and the company's Q4 financial expenses are likely to increase month-on-month; ② the price of the company's products may have declined slightly. The company's cash dividend is about 37 million yuan, and the cash dividend ratio is about 27%; the transfer ratio of 10 to 9 is at a relatively high level, one step away from the high transfer rate. The leading photoinitiator segment, the company with significant advantages in the entire industry chain is mainly engaged in R&D, production and sales of photoinitiators, thiol compounds and derivatives. The main products of photoinitiators include 907, 369, TPO, 184, ITX, BMS, etc., of which 907 has a production capacity of nearly 2,000 tons, accounting for more than 60% of the global market share, and is a leader in the photoinitiator segment. The company also has a production capacity of 2,000 tons of thiol compounds, some of which are self-used as photoinitiator intermediates, and some intermediates are sold externally. The company's 907, ITX, BMS and other products are equipped with upstream thiol compound intermediates, which have advantages throughout the industry chain. The development of light-curing inks is just right, and the market space is broad. Light-curing inks are rapidly replacing traditional solvent-based inks due to their wide coating adaptability, higher quality, no VOCs emissions, and lower cost. According to data from China Industry Information Network, the growth rate of China's UV ink market was above 10% in 2012-2015, but UV ink accounted for only 7% of the total ink. As environmental protection becomes more strict since 2016, UV inks will surely accelerate the replacement of traditional solvent inks. Inner Mongolia added 29,000 tons of production capacity, laying the foundation for future high growth. In April 2018, the company issued an announcement to change the original fund-raising “5,000 t/a photoinitiator series product construction project” to a “29,000t/a photoinitiator and pharmaceutical intermediate project”, which includes 11,000 tons of terminal photoinitiators and supporting upstream intermediates, and 3000-4000 tons of pharmaceutical intermediates. The company added photoinitiator production capacity several times that of the existing production capacity, and equipped its own upstream intermediates, continuing the integrated advantages of the entire industry chain. The project has an investment of 500 million yuan, and is expected to achieve revenue of 950 million yuan and net profit of 270 million yuan. The gradual commissioning of the Inner Mongolia project will lay the foundation for the company's high future growth. The company's net profit for 2018, 2019, and 2020 is estimated to be 1.41, 1.86, and 265 million yuan, respectively, corresponding to PE 25, 19, and 13 times PE. For the first time coverage, an increase in holdings rating is given.