Key investment points: The company is a leading anthraquinone dye, and the discontinuation of production in the northern Jiangsu park has greatly affected performance. The company is mainly engaged in the management and sale of anthraquinone dyes and intermediates, and is the leading domestic anthraquinone structural dye; according to the company's annual report, the company's anthraquinone disperse dyes had the highest domestic market share, reaching 35%; anthraquinone reduced dyes also ranked first in the industry. In April 2018, after the company stopped production at 7 subsidiaries and 1 branch in Guannan Park in northern Jiangsu, the company's performance was greatly affected; from January to September 2018, the company's current operating income was 1,644 billion yuan, -32.97% year-on-year, and net profit was 274 million yuan, or -43.50% year-on-year. The most difficult period has passed, and the resumption of production in northern Jiangsu is expected to accelerate. After six months of discontinuation of production, on October 12, 2018, the company finally issued an announcement confirming that three companies in Guannan Park in northern Jiangsu Province, Hual Chemical, Yabang Dye Lianyungang Branch, and Yabang Acid had resumed production. The above three companies accounted for 62.97% of the company's 2017 operating income and 96.44% of net profit. However, due to the park's overall environmental support, it is still difficult for the company to completely return to normal operating rates. On January 10, 2019, Adama A (000553.SZ) and ST Huifeng (002496.SZ) issued relevant announcements. Adama plans to acquire Huifeng's agrochemical assets in Guannan Park. Adama's presence is conducive to improving the park's overall safety and environmental protection management, as well as speeding up the resumption of production by Yabang Co., Ltd. For details, please refer to our report of January 11, 2019, “Adama Plans to Acquire Huifeng Assets, Substantial Benefits for Resuming Production in the Northern Jiangsu Park Are Beginning”. Outreach mergers and acquisitions develop new profit growth points. On September 6, 2018, the company signed a “Letter of Intent for Cooperation” with Xuzhou Kaida Chemical to acquire the anthraquinone reduced dye Kaida Chemical to further improve the company's product structure and increase its voice in the anthraquinone reduced dye market. On October 12, 2018, the company announced that its subsidiary Hang Lung Crops plans to acquire 100% of Ningxia Yadong's shares with RMB 132 million. Ningxia Yadong mainly engages in herbicide intermediates. A number of products are important raw materials in Hang Lung's upstream. After the acquisition is completed, integrated pesticide production will be realized; Ningxia Yadong's net profit in 2019-2021 will not be less than RMB 21 million, RMB 18 million and RMB 18 million respectively. The cumulative net profit achieved over three years is 57 million yuan. Furthermore, production of Hang Lung Crops is currently discontinued. Through the acquisition of Yadong, Ningxia, it is possible to transfer part of production capacity and spread risk. Profit forecast and investment rating: First coverage, giving an “increase in holdings” rating. The company is the leader in anthraquinone dyes in China, and its market competitiveness is strong; after the resumption of production of its subsidiary in northern Jiangsu accelerates, performance is expected to continue to improve. The company's EPS in 2018-2020 is expected to be 0.49, 0.67, and 1.27 yuan/share, corresponding to PE 15.66, 11.38, and 6.04 times (due to financial prudence, the influence of Xuzhou Kaida and Ningxia Yadong is not taken into account yet). It was covered for the first time, and a “increase in holdings” rating was given. Risk warning: The progress of the subsidiary's resumption of production fell short of expectations, product prices fell, and the acquisition progress fell short of expectations.