The incident company released its 2019 mid-year report. During the reporting period, it achieved main revenue of 987 million yuan, a year-on-year increase of 57.22%, net profit to mother of 23 million yuan, an increase of 37.79% over the previous year, and operating cash flow of 80.5 million yuan, an increase of 442% over the previous year. Due to the combination of key investment factors, profit growth exceeded expectations: due to the expiration of the production safety license at the Guixi base at the end of the year, during the reporting period, the Guixi base planned a reduction of 89.92 million yuan, affecting net profit to mother of 69.62 million yuan. The actual profit far exceeded market expectations. The comprehensive overhaul of chemical parks along the northern Jiangsu coast has led to an imbalance between supply and demand for some intermediates, and the volume and price of the core product Cobwell have both increased. The results of the state-owned enterprise reform are beginning to show. The total number of employees and functional departments have all been drastically reduced, per capita income has increased markedly, and the interests of all parties have basically been the same after employees have taken shareholding. The requirement that pesticides are low toxic and non-toxic has driven the company to upgrade its products and raise barriers. Urethane insecticides are the company's core variety, and they are exclusively produced domestically. In addition, the company dominates products such as carbovir, medovir, and menavir. In recent years, the company has grasped the development trend of high efficiency, low toxicity, and low residue of pesticides, and has relied on the strength of the Hunan Chemical Research Institute to focus on developing products such as butyl sulfide, prothiac and dimethadowel, which has greatly consolidated the barriers to the business of Kribvir and Dodovir. Organophosphorus pesticides are an important part of the company's revenue. The pyrimidine alcohol and methacil developed by the company are exclusively produced domestically, and the advantages are obvious. It spent 840 million yuan to create heterocyclic pesticides and environmentally friendly pesticides. When the 840 million yuan heterocyclic pesticide and intermediate industrialization base project and the environmentally friendly pesticide project are put into production, the estimated revenue increase will reach 15-20 billion yuan, which is equivalent to another Hailey. The new project replicates the production experience of carbamate pesticides, develops large tonnage original drug varieties, focuses on self-supporting key intermediates, and shifts the variety from pesticides to pesticides and biocides with equal emphasis. Among long-term storage varieties, salicylnitrile and methacil are worth focusing on. In research products, there is a wide demand for salicylnitrile pyrimidine intermediates and products with green cleaning processes. Among the products produced, methacil has a market potential of 10,000 tons. Profit forecast and investment rating: We expect the company's revenue from 2019 to 2021 to be 2,061 billion yuan, 2,494 billion yuan, and 2,783 billion yuan, respectively, net profit to mother of 149 million yuan, 241 million yuan, 289 million yuan, EPS 0.42 yuan, 0.68 yuan, and 0.81 yuan respectively. The PE corresponding to the current stock price is 15X, 9X, and 8X, respectively. Considering that the company's product range and capacity reserves are expected to bring continued growth to the company's performance, we maintain a “buy” rating for the company. Risk warning: Comprehensive remediation of coastal chemical parks in northern Jiangsu has gradually been normalized, leading to a decline in the prices of related intermediates; the promotion of methacil falls short of expectations.