The market for industrial biocides is vast, and increasing environmental protection is driving market demand. The global industrial biocides market is about 40 billion yuan, and the industry growth rate is about 3-5%; the Chinese market is about 12 billion yuan, with a growth rate of about 10%. It is the second largest market in the world, accounting for about 30% of the market share. Downstream industrial fungicides are mainly used in industrial water treatment, crude oil extraction, paper, daily chemicals, coatings and other industries. Among them, industrial water treatment accounts for 42% of the market share. With the implementation of environmental taxes and sewage permits, industrial wastewater treatment volume is increasing year by year, which has a strong driving effect on the demand for upstream water treatment chemicals. The largest isothiazolinone fungicide company in Asia, with a high market share for its main products and obvious competitive advantage. Isothiazolinone fungicides have the advantages of broad spectrum, high efficiency, low toxicity, low dosage, easy degradation, etc., and are currently the mainstream industrial fungicides. The company currently has 35,000 tons of isothiazolinone fungicides, including several series of products such as CIT/MIT, MIT, OIT, DCOIT, and BIT. The production capacity ranks first in Asia and has strong scale and cost advantages. At the same time, the company has established long-term and stable cooperative relationships with well-known domestic and foreign companies such as Dow Chemical, Germany's Lanxess, Klein, and Huatai Paper, etc., and has stable customer channels. The fund-raising project will fully benefit from the increase in product prices brought about by the supply gap. In order to ease production capacity bottlenecks, the company actively invests in fund-raising projects to expand production capacity. Fundraising projects include CIT/MIT 12,000 tons, BIT 2,500 tons, and F nitrile 7000 tons. Among them, F nitrile accounts for about 30% of production capacity due to the environmental protection incident in Jiangsu, and market supply is seriously insufficient, leading to a sharp rise in the price of F nitrile and downstream BIT fungicides. Each 10% increase in F nitrile and BIT prices can contribute about 41 million dollars in profit. The performance is very flexible. The fund-raising project is expected to be put into operation in May 2019, which will greatly increase the company's performance after delivery. Profit forecast and investment rating: As the company invests in Fnitrile, BIT and other fund-raising production capacity and rising product prices, the company's performance is expected to grow rapidly in the next few years. We expect the company's net profit from 2019 to 2021 to be 329/6.19/763 million yuan, up 126.7%, 88.0%, and 23.3% year-on-year respectively. The corresponding EPS is 1.76/3.31/4.09 yuan, respectively. Combined with the relative valuation, the target price was 40.5 yuan, corresponding to 23 times PE in 2019. First coverage, and a “buy” rating was given. Risk warning: The commissioning of fund-raising projects falls short of expectations, the entry of new production capacity intensifies competition in the industry, large fluctuations in raw material prices, the risk of production safety, and the risk of large exchange rate fluctuations.