The company is a leading domestic fluorine chemical company, and its business covers pharmaceuticals, pesticides and electronic chemicals. The company is a world-leading fluorobenzene fine chemicals manufacturer with a complete product chain and production capacity. It mainly engages in pharmaceuticals, pesticides, electronic chemicals and new energy lithium battery materials, and mainly provides customized production, R&D and technical services for enterprises related to international giants. Pharmaceutical chemical products mainly include fluorinated intermediates for cardiovascular drugs, diabetic drugs, psychotropic drugs, anti-infective drugs and antiviral drugs, etc., as well as the production and sale of pharmaceutical raw materials and preparations; pesticide chemical products mainly include the production and sale of fluorine-containing herbicides, fungicides, pesticide intermediates, and wholesale and retail of pesticide raw materials and preparations; electronic chemical products mainly include fluorine-containing single crystal intermediates, single crystals and flat panel display color filter film materials (CF photoresist), etc.; new energy lithium battery materials mainly include lithium hexafluorophosphate and difluoride lithium fluorosulfonimide. The negative impact of acquisitions and capacity expansion on profits is gradually decreasing. The company's profit fluctuated greatly in 2016-2018 and the non-recurring profit and loss were high. The main reasons were: 1) a large number of asset impairment losses due to multiple acquisitions, and the company made a large number of acquisitions in 2016-2018. Among them, investment in Merceda, which was the target of the acquisition in 2016, led to a sharp increase in depreciation and amortization; 2) The increase in fixed assets led to a sharp increase in depreciation and amortization. The size of the company's fixed assets and intangible assets increased significantly from 1.28 billion yuan and 280 million yuan in 2019 Q3, respectively. 100 million yuan. Depreciation and amortization in 2016-2018 were 0.36 million, 0.72 million, and 91 million yuan respectively, and 2019H1 was 47 million yuan; however, profits from the company's acquisitions and expansions in production capacity during the same period fell short of expectations, affecting profits. At present, the company's layout of pharmaceuticals, pesticides, and electronic chemicals has basically been completed, and the expanded production capacity has also entered the production period, which will gradually contribute to performance. The fluorine chemical industry is booming, driving the company's profit to improve rapidly. Fluorine chemical processes are dangerous and polluting, and fluorine-containing wastewater and solid waste are difficult to treat. After two years of domestic safety supervision and environmental protection, a large number of small and medium-sized enterprises have withdrawn from the market. The company has benefited significantly as an industry leader. In the first half of 2019, the company's pharmaceutical business achieved revenue of 543 million yuan, which is basically the same as the same period last year, but gross margin reached 41.6%, an increase of nearly 5 percentage points over the previous year; the pesticide business achieved revenue of 385 million yuan, +117.5% year-on-year, and a gross profit margin of 25.8%, an increase of 2 percentage points over the previous year. In the first three quarters of 2019, the company achieved revenue of 2,668 million yuan, +26.18% year-on-year, net profit of 318 million yuan, -20.23% year-on-year (the base was high due to the company's sale of shares in the same period last year), and net profit after deduction of 271 million yuan, +71.87% year-on-year. Among them, in the third quarter, the company achieved revenue of 987 million yuan, +20.46% year-on-year, net profit of 176 million yuan, +390.88% year-on-year, and net profit after deduction of 131 million yuan, +83.71% year-on-year. The results for a single quarter improved significantly. A number of projects have entered the production period, and profits are expected to expand rapidly. In the pharmaceutical business, Yongtai Palm has an annual production of 4,340 tons of APIs and 600 million tablets of traditional Chinese medicine, and construction of the project is being carried out in an orderly manner according to plan. The main equipment has arrived, and the equipment is currently being installed. The subsidiary Zhejiang Shuxin received the on-site inspection report issued by the FDA. The quality management system of the production site complies with US FDA standards and has passed the US FDA on-site inspection; another subsidiary, Yongtai Pharmaceutical, has declared to the US FDA for a simplified new drug application (ANDA, or US generic drug application) for roivastatin calcium tablets (ANDA, US generic drug application) has been approved, and product release is imminent. In the electronic materials business, the construction of the Yongtai High-tech lithium bifluorosulfonimide production plant is progressing smoothly. Preliminary online tests have been carried out, and production is expected to begin by the end of the year. Profit forecast and investment rating: First coverage, giving an “increase in holdings” rating. The company is a leader in fluorine chemicals in the industry, benefiting from the increased concentration of the industry. The company's EPS for 2019-201021 is expected to be 0.54, 0.64, and 0.76 yuan/share, respectively, and the corresponding PE is 15.95, 13.47, and 11.23 times, respectively. It was covered for the first time, and a “increase in holdings” rating was given. Risk warning: falling product prices, safety and environmental risks, new project commissioning progress falls short of expectations