Core view The company's traditional business has entered a bottleneck in development. The three-quarter results declined slightly year-on-year. The main focus was on various new business promotion processes: the aluminum-plastic film business received orders, the PC/PMMA project was steadily being built, and the view that the company would achieve rapid performance improvement through technology accumulation remains unchanged. Maintain a target price of 14 yuan and a “buy” rating. After deducting non-performance, the downward trend continued. The company disclosed its 2019 three-quarter report. In the first three quarters, it achieved net profit to mother of 187 million yuan, an increase of 12.19% over the previous year, net profit after deduction of 135 million yuan, a year-on-year decrease of 15.87%, and performance compensation of 367.484 million yuan for Warwick New Materials compensation obligors in the third quarter. We determine the main reason why the company's traditional business has entered a bottleneck in development, and the company's new products and new businesses are in the promotion stage and domestic performance has continued to decline. Comprehensive materials platform companies are gradually taking shape, and product structure improvements are expected to reverse the decline in performance. Benefiting from the growth of domestic power soft pack batteries, the company's aluminum-plastic film product market has expanded. At the beginning of 2019, the company signed a framework cooperation agreement with well-known domestic battery companies such as Tianjin Lishen, laying a good foundation for the company to further develop the middle and high-end battery market. Furthermore, the company's quantum dot film has reached mass production conditions and is expected to seize future market development opportunities. It is expected that the price of quantum dot film will drop to around $30 after localization is achieved in the future. As costs decrease in the future, quantum dot film is expected to be popularized and promoted in the large panel market. During the production capacity expansion phase, it is expected that the level of performance will improve after delivery. TD Optoelectronics, a wholly-owned subsidiary of the company, added a new construction project for an optical grade PC/PMMA co-extruded film/sheet production line with an annual output of 10 million square meters, which fully achieved the estimated annual revenue of 50 million yuan and a total annual profit of 141.9 million yuan after delivery. Meanwhile, with the development of technologies such as 5G communication, wireless charging, and NFC, the PC/PMMA market will continue to expand. With its performance and cost advantages, PC/PMMA composites are expected to become the main medium- and low-end mobile phone backplane materials in the future, and a strong pillar for the company's future revenue and profit growth. Risk factors: Competition in the reflective market intensified; optical film prices declined; PC/PMMA project construction fell short of expectations. Investment advice: The company's performance continues to decline. The main focus is on the pace of subsequent business promotion: the aluminum-plastic film business has received orders, and the PC/PMMA project is being built steadily. We remain optimistic about the company's potential to achieve rapid performance improvement through technology accumulation. Maintain the 2019-2021 EPS forecast at 0.48/0.63/0.75 yuan, and maintain the target price of 14 yuan (corresponding to 29 times PE in 2019) and the “buy” rating.