Net profit for 2018 increased by 15%-25%. Performance was slightly lower than expected. Strong New Materials released its 2018 performance forecast on January 29. The company expects to achieve net profit of 146-158 million yuan for the whole year, an increase of 15% to 25% over the previous year. The performance is slightly lower than expected. Based on the latest share capital of 271 million shares, the corresponding EPS is 0.54-0.58 yuan. Among them, Q4 achieved net profit of 0.34 to 46 million yuan, an increase of 70%-130% over the previous year. We expect the company's 2018-2020 EPS to be 0.57/0.81/0.98 yuan respectively, maintaining the “gain” rating. The main business was generally steady. The 18Q4 performance surged year on year. During the reporting period, sales revenue from the company's main businesses such as PCB photoresist photoinitiators/LCD photoresist photoinitiators/photoinitiators for other uses increased, and rising photoinitiator prices led to an increase in gross margin, and the company's performance achieved relatively rapid growth. On the other hand, major subsidiaries such as Qiangli Yulei and Jiaying Chemical operated smoothly, and the company's net profit in 2018 Q4 increased by 70%-130% year-on-year (2017Q4 Jiaying Chemical stopped production due to environmental issues). The company expects the amount of non-recurring profit and loss in 2018 to be 10-15 million yuan (mainly government subsidies), which is also beneficial to the current results. OLED business development prospects are good. According to DSCC estimates, global OLED panel shipments will reach 9 million square meters in 2019, an increase of 35% over the previous year. As production capacity of major manufacturers such as BOE and Vicino climbs, domestic demand for OLED materials is expected to maintain rapid growth. The subsidiary Qiangli Yulei's OLED sublimation materials were mass-produced in September 2017, and have now entered the R&D lines and production lines of major domestic OLED panel manufacturers. On the other hand, Qiangli Yulei also signed an agreement with LG Chemical in July 2018 to provide OLED material solutions to domestic panel manufacturers through the joint establishment of an OLED material evaluation laboratory in Chengdu. The Industrial Chain Extension and Continued Promotion Company announced on October 12, 2018 that it plans to increase the capital of Xinyu in Changsha with its own capital and transfer some of its shares. The total amount of capital increase and share transfer consideration is 84.5 million yuan. The above acquisition was completed at the end of 2018. Currently, the company holds 34.5% of the shares in the subject of the acquisition. Changsha Xinyu is the largest manufacturer of photosensitive initiator series products in China, and has a certain synergy with the company's main business. Previously, in October 2018, the company completed the acquisition of 10% of Gelin Photosensitive's shares and entered the UV-LED ink field. This product has significant environmental advantages, mainly replaces traditional gravure inks, and has broad development space. Photoresists in the traditional business of maintaining the “increase in holdings” rating have maintained rapid development, and the layout of high-end emerging materials such as OLED and IC continues to advance, and the market prospects for entering the UV-LED field are broad. Based on the performance forecast, since the company's product sales were slightly lower than our previous expectations, we slightly lowered the company's net profit forecast for 2018-2020 to 1.55/ 2.20/265 million yuan (original value 1.72/2.32 billion yuan), corresponding to the 2018-2020 EPS to 0.57/0.81/0.98 yuan respectively. Combined with comparable company valuation levels (33 times PE average in 2019), considering the company's OLED and UV-LED ink business growth in 2019 36-38 times PE, corresponding to the target price of 29.16-30.78 yuan (original value 27.09-28.35 yuan), maintaining the “gain” rating. Risk warning: Risk of core technology loss, new business development falling short of expectations, risk of downstream demand fluctuations.