The incident company released the 2019 semi-annual performance forecast on the evening of July 12: the company's 2019H1 is expected to achieve net profit of 41.28 million yuan to 50.46 million yuan, a year-on-year change of -10%-10%. The company's performance is basically stable. Electronic functional materials are poised for development, and the company's performance is basically the same compared to the same period last year. Mainly because the information security materials sector remains stable, and further breakthroughs have been made in electronic functional materials. However, large-scale expansion will take time. The company's non-recurring profit and loss during the reporting period was about 2.8 million yuan, compared to 3.68 million yuan in the same period last year, which did not account for much of net profit. The traditional information anti-counterfeiting materials sector provides the company with abundant cash flow. The company's information anti-counterfeiting materials sector products mainly include products such as thermal magnetic tickets and magnetic strips. Thermal magnetic tickets are mainly products such as railway tickets, which are common blue magnetic tickets; magnetic stripe products are common magnetic stripe cards, which are widely used downstream in commercial retail, transportation, finance, social security and other fields. In terms of thermal magnetic tickets, the company is the first domestic enterprise engaged in the production of thermal magnetic tickets, and is currently the largest manufacturer of thermal magnetic tickets in China. In terms of magnetic stripes, the company occupies more than half of the domestic market share, and is also one of the top four international magnetic strip manufacturers. Although growth in the traditional business sector is weak and facing replacement by e-tickets, EMV migration, etc., it is still a cash cow product of the company, enabling the company to maintain a gross margin of about 60% and an ROE of about 20%, and brings about 110 million dollars of cash flow to the company every year, which not only brings rich profits to the company, but also provides sufficient capital for the company's transformation. Electronic functional materials open up space for future growth. Since the company's traditional business hits the ceiling of the industry, the company gradually began to lay out the electronic functional materials sector in 2018: in August 2018, the company announced the termination of the implementation of the “Thermal Magnetic Ticket Production Line Expansion Project” and signed an investment agreement with Sichuan Chengmei Petrochemical Park to build an electronic materials R&D industry base in Chengmei Petrochemical Park, focusing on products such as electromagnetic shielding films and pressure test films, with a total planned investment of 500 million yuan. The construction period is 3 years, reaching an annual output value of 400 million yuan and annual tax revenue of 22.5 million yuan after delivery. The downstream electromagnetic shielding film is mainly used in flexible circuit board FPC. Due to the prominent problem of 5G signal crosstalk, the amount of electromagnetic shielding film used in FPC will increase, leading to a high increase in demand. According to the MarketsandMarkets report, the global electromagnetic shielding market will grow from US$6.3 billion in 2019 to US$8.2 billion in 2024, with an average annual growth rate of 5.34%; while the market space for electromagnetic shielding film for FPC will reach nearly 4 billion yuan in the future. In terms of the domestic market, the average annual growth rate of China's electromagnetic shielding film market was as high as 21% in 2014-2017, and it is expected to maintain a growth rate of nearly 20% in the next few years. A pressure test film is a material that can accurately measure pressure magnitude, pressure distribution, and pressure balance. Downstream is used for condition evaluation of production and testing equipment in many fields such as liquid crystal displays, semiconductors, electronic circuit industries, mechanical equipment, etc. Major global pressure test film manufacturers include Tekscan (USA), Fujifilm Corporation (Japan), Sensor Expert (USA), and Bestech Australia Pty. Ltd (Australia). The dependence on domestic product imports is high. In the current context of localization of panels and semiconductors, the company's stress test film will benefit from both the incremental market and the import substitution market. At present, some of the company's new products, such as electromagnetic shielding films and pressure test films, have achieved partial sales. It is estimated that the company's net profit in 2019 and 2020 will be 130 million yuan and 210 million yuan respectively, corresponding to PE 21X and 13X, maintaining the increase in holdings rating.