The company is a leading modified plastics enterprise in China, actively deploying 5G materials to explore breakthroughs. The company's main products are modified plastics and high-performance polymer materials. Customers include well-known domestic and foreign companies in the electronics and home appliance industry, such as Foxconn, Samsung, Lenovo, ZTE, Hisense, and Skyworth. The company's initial project is expected to add 120,000 tons/year of modified plastics production capacity and contribute 260 million yuan in net profit. The company's performance is expected to double tenfold. The modified plastics industry is sluggish. The company is actively deploying 5G materials such as PTFE and LCP through epitaxial mergers and acquisitions, and is expected to achieve transformation from “small but beautiful” modified plastics to leading domestic 5G materials companies. High-frequency PCBs for 5G base stations welcome rapid development, driving high demand for PTFE substrates. As the only domestic PTFE company that can use high-frequency PCBs, the company is expected to fully benefit. 5G requires a higher degree of integration for base station PCBs. As one of the key filler materials for PCBs, PTFE is the best filler material because of its excellent electrical properties, and a new wave of base station construction will bring nearly 13 billion dollars of market space to PTFE. The company acquired 51% of Deqing Cosai's shares in PTFE. Deqing Cosai is the leading fluoropolymer material company in the industry. Films for high-frequency equipment have already been mass-produced. The company is the only domestic company that can use PTFE for high-frequency PCBs, and is expected to benefit greatly from 5G and the wave of import substitution. The FPC substrate for 5G mobile phone antennas has been upgraded, and LCP is the best choice. The company's LCP production technology is globally competitive and is expected to be the first to break through in the localization process of core materials. 5G uses higher frequency signals and has higher requirements for the dielectric constant and dielectric loss of materials. LCP, as the best FPC substrate to replace PI, has been used in connectors and iPhone mobile phone antennas. As the range of 5G expands, demand for LCP materials is expected to grow rapidly, and the space is expected to reach 4.7 billion. The company acquired all of Samsung Precision's LCP business in 2014 and has an LCP production capacity of 3kt/a. Currently, the company's products are used in precision electronic connectors, connectors and other fields. The company has successfully developed film and fiber-grade LCP and verified related products. After success, it is expected that it will be the first to achieve import substitution. The weight reduction of automobiles is driving demand for modified plastics, and raw material prices have fallen back to the bottom of earnings to improve. Modified plastics are intermediate products in the petrochemical industry chain, mainly used in automobiles, home appliances, electronics, office supplies, construction and other fields. After experiencing rapid growth in household appliances going to the countryside, the growth rate of China's electronics industry is relatively stable, while demand for modified plastics is growing rapidly, driven by the trend of automobile lightweighting, and the future CAGR is expected to be above 10%. The raw materials of modified plastics are mainly various resins, which account for more than 90% of the cost, so the cost is greatly affected by fluctuations in crude oil prices. Since the second half of 2016, raw material prices have risen sharply. Due to the relatively poor bargaining power of modified plastics companies and the slow transmission of cost increases, product gross margin has declined sharply. With the decline in raw material prices in Q4 2018, the company's profit is expected to improve. Earnings forecasts, valuations and investment ratings. We predict that the company's net profit for the 18-20 year period will be 0.35/0.55/80 million yuan, corresponding to EPS of 0.30/0.47/0.68 yuan, respectively, and the current stock price corresponding to PE is 45/29/20 times; the company is a leading domestic modified plastics enterprise, raw material prices have declined, and the profitability of the main business is expected to pick up. 5G is driving the replacement and upgrading of electronic materials. The company's acquisition of PTFE in Deqing Cosai is expected to rapidly increase performance in the context of PCB substrate changes; LCP technology is leading the world, and the successful development of film materials is expected to achieve import substitution. Combining the company's 19-year performance and industry valuation of 65 times, we gave a target price of $30.55, covering the first time, and giving it a “strong push” rating. Risk warning: raw materials have risen sharply; project investment and construction have fallen short of expectations; product development and industrialization have fallen short of expectations; and downstream verification progress has fallen short of expectations.