Net profit increased by 18% in 2018. In line with expectations, Strong New Materials released its 2018 performance report on February 26. The company expects to achieve annual operating income of 729 million yuan, an increase of 13.9% over the previous year, and net profit of 149 million yuan, an increase of 17.6% over the previous year. It is within the range of the previous performance forecast (1.46 to 158 million yuan), in line with market expectations. Based on the latest share capital of 271 million shares, the corresponding EPS is 0.55 yuan. Among them, Q4 achieved operating income of 216 million yuan, a year-on-year increase of 28.6%, and net profit of 37 million yuan, an increase of 85.0% over the previous year. We expect the company's 2018-2020 EPS to be 0.55/0.81/0.98 yuan respectively, maintaining the “increased holdings” rating. The main business was generally stable. During the Q4 revenue record high reporting period, sales revenue from the company's main business, such as PCB photoresist photoinitiators/LCD photoresist photoinitiators/photoinitiators for other uses, increased sales revenue, 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 Yulai and Jiaying Chemical operated smoothly. 18Q4's single-quarter revenue exceeded 200 million yuan for the first time, and the quarterly net profit surged 85% year-on-year (base factor, 2017Q4 Jiaying Chemical ceased production due to environmental issues). Furthermore, the company expects the amount of non-recurring profit and loss in 2018 to be 10-15 million yuan (mainly government subsidies). The OLED materials business is developing well. According to DSCC forecasts, global OLED panel shipments will reach 9 million square meters in 2019, an increase of 35% over the previous year, corresponding to the OLED materials market size of about 10 billion yuan. As the production capacity of major manufacturers such as BOE and Visionox climbs, domestic demand for OLED materials is also expected to grow rapidly. The subsidiary Qiangli Yulai achieved mass production of OLED sublimation materials in September 2017, and has now entered the R&D and production lines of major domestic OLED panel manufacturers. On the other hand, Qiangli Yulai 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, and is expected to quickly occupy the terminal market in the future. The extension of the industrial chain continues to promote the company's capital increase acquisition of 34.5% of Xinyu's shares in Changsha at the end of 2018. The target company is the largest manufacturer of photosensitive initiator series products in China. The products include more than 20 varieties, including 1173, 184, 369, 907, TPO, PBZ, and ITX, which have a synergistic effect with the company's main business. Previously, in October 2018, the company also completed the acquisition of 10% of Green's shares and entered the field of UV-LED inks. This product has significant environmental advantages, mainly replaces traditional gravure inks, and has broad development space. Maintaining the “increase in holdings” rating combined with rapid performance reports, we slightly lowered the company's 2018 net profit forecast to 149 million yuan (original value 155 million yuan), maintaining the company's 2019/2020 net profit forecast of 220/265 million yuan, corresponding to the 2018-2020 EPS of 0.55/0.81/0.98 yuan, respectively, combined with comparable company valuation levels (42 times PE average in 2019), considering the growth of the company's OLED and UV-LED ink business, giving the company 44- in 2019 48 times PE, corresponding to the target price of 35.64-38.88 yuan (original value 29.16-30.78 yuan), maintaining the “increased holdings” rating. Risk warning: risk of core technology being lost, new business development falling short of expectations, and risk of fluctuations in downstream demand.