Incident: The company released its 2018 annual performance report: the company's total revenue was 526 million yuan, up 20.51% year on year; operating profit was 154 million yuan, up 119.43% year on year; total profit was 161 million yuan, up 113.85% year on year; net profit attributable to the parent company was 137 million yuan, up 110.83% year on year. Earnings per share were $1.15. Comment: In 2018, the price of photoinitiator products generally increased, and the company benefited, and its performance increased dramatically. In 2018, due to environmental impact, supply was tight, and the prices of various photoinitiator products rose. Among them, the prices of 1173, 184, TPO, and 907 increased by 91%, 24%, 30%, and 94%, respectively. The company mainly focuses on thiol compounds and 907 photoinitiator products, and has also benefited from product price increases. At present, the company's 907 products have a market share of more than 60%. During the reporting period, sales volume increased slightly compared to last year, so net profit increased dramatically. 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. China is the largest producer and exporter of photoinitiators in the world. The production concentration is constantly increasing. The company is rapidly expanding the range and product scale of photoinitiators and expanding its market share. At present, China has become the largest producer of light-cured raw materials and formulations after the United States and Japan. In particular, photoinitiators have become the largest producer and exporter. There were several hundred initial photoinitiator manufacturers in China. After more than ten years of full competition, the trend of concentration is becoming more and more obvious. According to 2016 statistics, photoinitiator manufacturers have concentrated to 16. The company seizes opportunities, rapidly expands product categories and scale, puts products on the market before competitors, seizes the opportunity, and is expected to increase rapidly in market share. 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 1.56 yuan and 1.90 yuan per share in 2019-2020, corresponding to PE of 21.2 times and 17.4 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.