The incident company released its 2018 three-quarter report. During the reporting period, it achieved revenue of 1,356 billion yuan, an increase of 24.78% year on year; net profit attributable to the parent company was 151 million yuan, up 74.7% year on year; net profit after deducting non-return to mother was 131 million yuan, up 76.37% year on year; and basic earnings per share was 0.67 yuan. Q3 achieved net profit of 63 million yuan in a single quarter, up 124.2% year on year and 24.8% month on month. Brief review: Environmental protection is becoming stricter, and costs drive pigment prices to continue to rise. During the reporting period, the price of upstream pigment intermediates continued to rise, which in turn promoted a continuous increase in product prices. In the first three quarters of 2018, the company's raw material procurement costs generally increased. The average prices of ethanaphthol, 3,3 dichlorobenzidine, CLT-acid, chromophenol AS-IRG, 4B acid, and 2B acid increased by 22.77%, 52.57%, 9.30%, 18.22%, 31.40%, and 99.66%, respectively, year-on-year in the first three quarters. On the product side, in the first three quarters of this year, the production and price of the company's main products were as follows: Yongguhuang produced 6,341 tons (-9.75% year on year), sales volume of 6919 tons (-2.40%% year on year), average price of 5,4543 yuan/ton (up 24.87% year on year); Lisol Red produced 4771 tons (-4.61% year on year), sales volume of 4811 tons (year-on-year increase of 19.03%); Yongguhong produced 3709 tons (year-on-year increase of 3.72%) amount 4,074 tons (up 10.11% year on year), average price 71,467 yuan/ton (up 7.94% year on year); red acid red production was 3180 tons (up 34.24% year on year), sales volume was 2,790 tons (up 15.33% year on year), average price was 3,576 yuan/ton (up 17.63% year on year); quinacridone series production was 544 tons (-19.02%% year on year), sales volume 588 tons (up 18.14% year on year). Production and sales declined across the board in Q3, and rising prices led to a sharp increase in performance. Judging from the Q3 single quarter, production and sales of the company's main products declined overall month-on-month. In terms of production, the production of the quinacridone series Q3 was only 0.925 tons, with the biggest drop of -99.68% month-on-month; in terms of sales, with the exception of Risol Red and Yongguhong series products, Q3 sales all fell by more than 20% month-on-month. Against the backdrop of an overall decline in production and sales, the Q3 pigment market continued to improve, and the overall rise in the company's product prices became the main factor in the sharp increase in performance. The single-quarter prices of the company's main products, permanent yellow, lithol red, colorimide red, and quinacridone series increased by 30.88%, 22.16%, 19.73%, 18.58%, and 21.65%, respectively. The Q3 single quarter price increases were 12.87%, 3.09%, 11.30%, 0.44%, and 4.68%, respectively. In terms of operating cash flow, which greatly increased expenses, sales, management, and financial expenses for the first three quarters were 2505, 5891, and -3.74 million yuan, respectively. Expenses rates were 1.85%, 4.34%, and -0.28%, respectively. Expense ratios changed by 0.38, -3.98, and -0.84 percentage points, respectively. The increase in sales expenses was mainly due to an increase in EU registration fees and an increase in wages. The significant decrease in financial expenses was mainly due to exchange gains resulting from exchange rate changes during the reporting period. In terms of cash flow, net cash flow from operating activities in the first three quarters was 94.21 million yuan, a sharp increase of 3212.20% over the previous year, mainly due to the shortened sales repayment cycle for some products and an increase in non-cash external payments. Focusing on the increase in industry concentration, leading companies hope to significantly benefit from organic pigment products having the attributes they need. Currently, the compound annual growth rate of domestic consumption has maintained a compound annual growth rate of 3%-5%. As domestic environmental control efforts continue to be strengthened, organic pigment companies with high energy consumption and high pollution will continue to withdraw, and leading standardized companies are expected to benefit significantly in the context of increased industry concentration. In the past two years, on the one hand, environmental protection issues have been strictly investigated across the country, and peers who have failed to meet environmental protection standards have stopped production and rectification; on the other hand, due to intense environmental pressure, there has been almost no new pigment production capacity in the industry. The company is a leading enterprise in the domestic pigment industry. We are optimistic about the company's large-scale production advantage in the process of industry integration. The company's net profit for 2018-2020 is 2.33, 2.89, and 315 million yuan respectively, corresponding to EPS of 1.04, 1.28, and 1.40 yuan, and PE12.4X, 10X and 9.1X, maintaining an “incremental” rating.