The fund-raising project was successfully put into operation in the second quarter, and the company's performance increased dramatically. The company achieved revenue of 350 million yuan in 2019H1, an increase of 38.81% over the previous year; realized net profit of 109 million yuan, an increase of 77.39% over the previous year, equivalent to EPS of 0.60 yuan/share, an increase of 76.47% over the previous year. The weighted average ROE was 13.16%, an increase of 4.37 percentage points over the previous year. Among them, 19Q2 achieved revenue of 213 million yuan, a year-on-year increase of 68.56%, an increase of 55.47% over the previous year; realized net profit of 81 million yuan, an increase of 125.37% over the previous year, an increase of 153.13% over the previous year, and the company's performance exceeded expectations. At the same time, since fund-raising projects were put into operation in 19Q2 and 19Q3, the gradual release of fund-raising production capacity will greatly increase the company's production and sales scale. The company expects a significant year-on-year increase in performance in the first three quarters of '19. The supply of F-nitrile and its downstream products is limited. Currently, product prices are still strong, and profitability is strong. 2019H1 had a gross profit margin of 53.77%, a year-on-year increase of 11.29 pct, a year-on-year increase of 32.17%, a year-on-year increase of 7.19pct, mainly due to rising prices of products such as F-nitrile and BIT; net operating cash flow was $83 million, up 13.70% year on year; and projects under construction were $79 million, up 107.44% year on year, mainly due to new construction or expansion of the company's CIT, MIT, OIT, and BIT projects. Q2 Company's F nitrile and BIT prices increased by 206.48% and 233.09% year on year. Currently, the average price of F nitrile remains at 80,000/ton, and BIT prices remain strong; in the second quarter, F nitrile production is 200.25 tons, sales volume is 242.75 tons, down 49.59% and 46.04% year on year respectively, mainly due to factors such as a decrease in operating rate and extended trial production time for expansion projects. After the Fnitrile intermediate expansion project is invested in the third quarter, it is expected that production and sales will decline. It has been improved. Fnitrile, MIT, and BIT were performance growth points in the second half of the year. The company is the largest manufacturer of isothiazolinone industrial fungicides in Asia. It has a production capacity of 30,000 tons, OIT1000 tons, and BIT2500 tons of the fungicide CIT/MIT. The production of methyl 3-mercaptopropionate, an intermediate for CIT/MIT and OIT, is highly polluting. The company's main domestic competitors are facing factory relocation due to environmental problems with the intermediate 3-mercaptopropionate, causing tight supply in the CIT/MIT market, and competitors are unable to solve the problem of intermediates in the short term. Currently, the global CIT/MIT production capacity is about 80,000 to 90,000 tons, of which the competitor has a production capacity of 20,000 tons, Baiao has a production capacity of 30,000 tons, and supporting intermediates. The current price is about 14,000/ton. Future CIT/MIT price increases will be very flexible to the company's performance. Fnitrile, MIT, and BIT are the company's profit growth points in the second half of the year. The company is expected to develop downstream formulations, opening up room for future valuation and growth. The business model for industrial biocides is similar to pesticides and dyes. Baiao is expected to enter the pharmaceutical field in the future with integrated costs and technical advantages; the industrial fungicide formulation side has higher added value. Currently, most of the market is occupied by multinational enterprises. In the future, with breakthroughs in technology and market channels, the company's profitability is expected to further increase, which will open up space for the company's future valuation and growth. Profit forecast and investment rating: We have raised the company's profit forecast. It is estimated that the net profit of the mother from 2019 to 2021 will be 4.02/620/764 million yuan, and the EPS will be 2.15/3.32/4.09 yuan. The current stock price corresponding to PE is 12/8/6 times, respectively. With the release of new production capacity such as F nitrile and BIT and the rise in prices of products such as CIT/MIT, the company's performance is expected to grow rapidly in the next few years. The performance is flexible, maintain a “buy” rating, and continue to recommend. 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.