The company released its 2019 three-quarter report, and its performance increased significantly. The first three quarters achieved operating income of 678 million yuan (YoY -2.50%) and net profit of 90,169 million yuan (YoY +49.61%), of which 2019Q3 achieved net profit of 31,503 million yuan (YoY +52.08%, QoQ -2.91%). The sharp increase in performance was mainly due to: 1) the steady increase in sales of epoxy rubber and polyurethane rubber production; 2) the decline in raw material prices and the improvement in the company's profit; 3) the “new materials+military” and “internal generation+external extension” strategic layout progressed steadily. The company is a leading enterprise in the adhesive industry, with significant competitive advantages in epoxy and polyurethane adhesives. The company's adhesive sector includes various categories such as epoxy adhesives, acrylic adhesives, polyurethane adhesives, SBS adhesives, etc. Epoxy adhesives are used in wind power blades, and solvent-free polyurethane laminating adhesives are used in the field of flexible packaging. In the field of wind power structural adhesives: The company's domestic market share has reached 60%, and its main customers are domestic wind power blade manufacturers such as Sinoma Technology and Mingyang Wind Power; the company is actively promoting business connections with internationally renowned wind power manufacturers Vestas and Siemens Gamesa in an effort to expand its market share. In the field of polyurethane adhesives: The company's sales revenue has maintained steady growth. With the strict control of VOC emissions and the upgrading of packaging consumption in the future, there is broad scope for replacing solvent adhesives. Furthermore, the company plans to invest 1.4 billion yuan to build a “chemical adhesive with an annual output of 100,000 tons and upstream and downstream new materials projects” through the wholly-owned Sun Company, Tangshan Caofeidian Company, to continue to lay out the adhesive industry, which is expected to achieve a smooth expansion of the industry map from the south to the north. “Endogeny+extension” lays out the military industry, and future growth can be expected. The company's military sector products mainly focus on electromagnetic compatibility equipment in the aerospace field and polyimide foam insulation materials in the field of ship engineering. Extension aspect: After completing the acquisition of BPC Technology in 2018, the company officially entered the field of electromagnetic compatibility in the military industry. Endogenous aspects: The company's polyimide foam is a new material used in the field of shipbuilding engineering. The material passed the military development certification review in March 2014, and is currently the best thermal insulation, insulation, and noise reduction polymer material that can actually be used. The company's product has been used in the production and sale of government equipment, and customers are using it well. Profit forecast and investment rating: As a leading domestic structural adhesive, the company's strategic layout of “new materials+military industry” and “endogenes+extension” is progressing steadily, and future growth is strong. For the first time, coverage was given an “increase in holdings” rating. The 19-21 EPS is expected to be 0.52/0.64/0.81, and the corresponding PE is 24/20/16 times. Risk warning: Raw material prices fluctuate greatly, orders fall short of expectations, acquisitions fall short of expectations, etc.