The company is a leading photoinitiator company, and the industry is showing a rapid development trend. In the future, with the gradual implementation of fund-raising projects, the company is expected to open up room for growth. We maintain the company's 2019/2020/2021 EPS forecast of 0.77/0.98/1.24 yuan, maintaining a target price of 19 yuan and a “buy” rating. The supply and demand pattern is tight, and the performance in the first half of the year increased year on year. The company achieved revenue of 280 million yuan in the first half of 2019, +10.66% year over year; realized net profit of 69 million yuan, +3.60% year over year. The company achieved revenue of 130 million yuan in Q2, -4.70% month-on-month; realized net profit of 0.3 million yuan, or -18.40% month-on-month. The company's revenue and net profit for the first half of the year increased year-on-year compared to last year, mainly due to improvements in the industry's supply and demand pattern under stricter environmental protection, and product profitability increased. The second quarter was affected by downstream inventory digestion and supply recovery. Product prices declined, resulting in a decline in gross margin, but remained above 40%. VOC control is leading the way in light curing, and the leading edge is remarkable. The country's control over VOC materials is getting stricter. It is expected that solvent-based inks and coatings will quickly withdraw from the market, water-based energy consumption is high, and the future market will be replaced by light-cured materials. At the same time, as new downstream application fields continue to emerge, the light-curing market is rapidly expanding. As a leading photoinitiator, the company is one of the few enterprises with production capacity for thiol compounds, the key raw materials. It guarantees lower costs and higher product quality with advantages throughout the entire industry chain, and has significant advantages. At the same time, the company continues to develop new photoinitiator products to meet customer needs in downstream food packaging printing, 3D printing, photoresists, etc. It has now entered the evaluation stage, and is expected to become a new growth point for the company's performance in the future. Raise production capacity to expand categories and increase market share of those with strong market share. The first phase of the company's Inner Mongolia project will add 29,000 tons of production capacity, including 11,000 tons of photoinitiators, including 3,000 tons of TPO, 184, and 1173, 2,000 tons of other photoinitiators, and 3,000 tons of pharmaceutical intermediates. Currently, the project is in the main equipment installation stage, and trial production work is expected to be carried out in October 2019. With the gradual implementation of the project, the company is expected to replicate the advantages of the entire 907 industry chain, expand the photoinitiator product series, increase the photoinitiator market share, adjust the product structure, and expand the production capacity of pharmaceutical intermediates, which is expected to greatly increase the company's performance. Risk factors: increased market competition; fluctuating product prices; capacity construction falling short of expectations; environmental emergencies. Investment advice: The company is a leading photoinitiator company, and the industry is showing a rapid development trend. With the gradual implementation of fund-raising projects, the company is expected to open up room for growth. We maintain the company's 2019/2020/2021 EPS forecast of 0.77/0.98/1.24 yuan, and maintain a target price of 19 yuan (25 times PE in 2019 based on PEG=0.9) and a “buy” rating.