The 1H2019 results are in line with our expectations, Shanghai Xinyang announced 1H2019 results: revenue of 277 million yuan, up 10.3% year on year, net profit of 277 million yuan to mother, reversing losses year on year (up 296 million yuan year on year), corresponding to profit of 1.43 yuan per share, which is in line with our expectations. The sharp year-on-year increase in net profit was mainly due to loss due to impairment of goodwill during the same period last year. At the same time, 1H19 generated investment income of 308 million yuan from the sale of Shanghai Xinsheng shares. 1H19 deducted non-net profit of 0.14 million yuan, an increase of 37 million yuan over the previous year. The 2Q19 company's revenue was 147 million yuan, up 5.8%/12.3% year on month, net profit to mother was 271 million yuan, and increased 305/264 million yuan YoY. In 2Q19, the company's gross profit margin was 29.4%, down 0.8/0.9 pct YoY. Development trend The revenue of traditional packaging chemicals has declined, and the revenue of ultra-pure wafer chemicals continues to grow rapidly. 1H19's electronic materials business revenue fell 9.9% year on year to 84.87 million yuan, and gross margin fell 2.27 pct year on year to 41.7% year on year, mainly due to declining industry sentiment and increased market competition, revenue of traditional packaging chemicals fell 20.6% year on year to 57.18 million yuan. As the scale of the downstream industry expanded and domestic substitution accelerated, wafer ultrapure chemicals achieved revenue of 27.68 million yuan, an increase of 57.5% year on year. Currently, the company's copper electroplating solution and copper and aluminum process cleaning solution are qualified suppliers to more than 20 domestic chip manufacturing companies, and are reference material suppliers for 22 wafer manufacturing production lines. With the expansion of the domestic wafer manufacturing industry and the acceleration of material import substitution, the company's wafer manufacturing chemicals are expected to continue to grow rapidly. 1H19 Fluorocarbon coatings business profits increased. The company's fluorocarbon coating business accelerated structural transformation and upgrading. 1H19 fluorocarbon coating business revenue increased 35% year on year to 164 million yuan, and net profit increased 13.64% year on year to 11.06 million yuan. The new environmentally friendly and energy-saving fluorocarbon aluminum coating project invested and built by 1H19 Copler formed large-scale production capacity and began sales. At the same time, Copple Powder, a new subsidiary of Copple, stepped up R&D and market development efforts for environmentally friendly powder coatings, and achieved mass sales and began making profits in the first half of the year. Profit forecast and valuation maintain the 2019/20 net profit forecast of 30/85 million yuan. Currently, the company's stock price corresponds to the 2019/20 price-earnings ratio of 21/75x. Maintain the target price of 33 yuan, an increase of 0.4% from the current stock price. The target price corresponds to the 2019/20 price-earnings ratio of 21/75x, maintaining a neutral rating. Risk wafer manufacturing chemicals grew less than expected, and paint business sales fell short of expectations.