Incident: The company released its 2018 annual performance forecast: The company's net profit attributable to shareholders of listed companies is expected to be 131-148 million yuan in 2018, an increase of 100.89% to 126.96% over the previous year. Net profit returned to mother for the same period last year was 65.2097 million yuan. The 2018 profit distribution and capital transfer plan from the Capital Provident Fund distributes a cash dividend of RMB 3 (tax included) to all shareholders for every 10 shares. At the same time, the share capital transferred from the Capital Provident Fund is increased by 9 shares for every 10 shares. Comment: The volume and price of the main products rose sharply in 2018, leading to a significant increase in performance. In 2018, due to environmental impact, supply was tight, and prices of thiol compounds and photoinitiator products rose almost all. Taking 907 as an example, the price increase was more than 30%, and prices such as ITX, 369, and TPO also rose sharply, and the overall profit of the industry was improving. The market share of the company's 907 products in the industry reached more than 60%. Sales during the reporting period increased slightly compared to last year, so net profit increased dramatically. The profit distribution plan matches the company's high growth. The company's 2018 profit distribution and capital increase plan was introduced. It is proposed to distribute a cash dividend of RMB 3 (tax included) to all shareholders for every 10 shares based on the company's total share capital of 123 million shares as of December 31, 2018. At the same time, 9 shares are increased for every 10 shares transferred to the capital from the Capital Provident Fund. After the capital transfer is completed, the total share capital of the company will increase to 234 million shares. The plan fully takes into account the interests and reasonable demands of investors, helps investors participate in and share the operating results of the company's development; takes into account the immediate and long-term interests of shareholders, and matches the company's business performance and future development. The first phase of the Inner Mongolia project is of great significance to the company and involves strategic development over the next three years. The first phase of the Inner Mongolia investment project “29,000 tons/year photoinitiator and pharmaceutical intermediate project” has a production capacity of 11,000 tons/year for photoinitiators and upstream raw materials (TPO, 184, 1173, etc.), and a production capacity of 18,000 tons/year for medical intermediates and thiol compounds, respectively. The construction period of the project is 2 years. After the project starts, it can be partially put into production and generate benefits in the third year, and the design and production capacity can be reached in the fifth year. The first phase of the Inner Mongolia project will not only enable the company's dominant product, thiol compounds, to continue to grow bigger and strengthen, and consolidate existing advantages; it will also expand the variety of products and enrich the product structure, which will greatly change the current situation where the company has a single variety of photoinitiators. The company's future product competitive advantage in terms of cost and scale is very obvious. According to our assumptions, the company is expected to achieve earnings of 1.11 yuan, 1.39 yuan, and 1.55 yuan per share in 2018-2020, corresponding to PE of 25.4 times, 20.4 times, and 18.1 times, and continue to maintain the company's “Highly Recommended - A” investment rating. Risk warning. The photoinitiator production capacity in the new construction project is successfully released. If it falls short of expectations, our output is assumed to be high; the photoinitiator market relies on downstream development. Assuming weak downstream growth, demand for the industry will not grow, which will have an impact on net profit growth.