A leading company in the domestic PVC additives industry, the expansion of production capacity has brought continuous growth. The company is currently the largest manufacturer of MBS impact modifiers in China and the second largest in the world. ACR processing aids and impact modifiers also rank among the top in China and the world. Currently, the company has a total ACR production capacity of 70,000 tons (10,000 tons added in 2018), MBS production capacity of 30,000 tons, MC production capacity of 20,000 tons (expected full production in the second quarter of 2019), and a comprehensive production capacity of 120,000 tons. Both of the company's Yiyuan and Yishui bases were successfully selected as Shandong Chemical Parks, paving the way for medium- to long-term development. The company plans to build 40,000 tons of MBS impact modifiers in the future (20,000 tons of the first phase of the project is expected to be put into operation in October 2019) and 50,000 tons of new high-end weather-resistant and highly transparent polymer materials. We expect the company's production to increase by about 20% this year, and in the future, as new production capacity is put into operation, the company's total production capacity is expected to double within three years, maintaining a high level of growth. Develop new application fields and open up demand ceilings. With the rise of the WPC, SPC and other floor and wall panel markets, the company took the lead in entering this industry and became a major supplier in the field of additives. Before 2016, the company's products accounted for about 60% of the traditional PVC business and 40% for other businesses, and the demand side faced obvious ceilings; currently, WPC, SPC and other whole house decoration materials accounted for close to 70%, and the traditional PVC pipe and profile business remained at 30%. The traditional PVC business is expected to maintain steady growth in the future, while the whole house decoration materials sector will maintain a large growth rate, leaving a ceiling of demand. Raw material prices have declined, and product price spreads have remained at a high level. Judging from past ACR prices and MMA prices, the fluctuation trends of the two are almost the same. The MMA price dropped from a high of 25,000 yuan/ton in April 2018 to 14,350 yuan/ton at present. Although ACR prices followed the decline in raw material prices. However, judging from the price difference, the price difference between ACR and 0.8*MMA remains high, and the company will still maintain a stable gross profit level. As a leading company in the PVC additives industry segment, the profit forecasting and valuation company continues to expand and open up the growth ceiling. It is expected that future production capacity will continue to be released, bringing long-term high growth to the company. For the first time, it was covered by the “Overweight” rating. The EPS for 18-20 is expected to be 0.44, 0.56, and 0.83 yuan, and the corresponding PE is 22, 17, and 11 times. We gave Ruifeng Hi-Tech a valuation of 21 times in 2019, corresponding to the target price of 11.8 yuan/share. There is still room for about 24%. Risk warning: The release of production capacity fell short of expectations, raw materials fluctuated greatly, and demand fell short of expectations.