Eliminate backward production capacity, and the viscose filament industry has an oligopoly. In 2019, the country's viscose filament production capacity was 210,000 tons, and there were only 5 manufacturers left. Among them, the top three accounted for 89.5% of production capacity, which is a significant oligopoly industry. In 2019, Xinxiang's chemical fiber viscose filament production capacity was 70,000 tons, accounting for 33% of the country. At the same time, the company is preparing to gradually transform the viscose staple fiber equipment in the new park and expand the production capacity of viscose filament. The production capacity is expected to reach 80,000 tons by 2020, and with the elimination of backward domestic production capacity, the company's leading position in the industry will be further consolidated. Spandex bucked the trend and expanded, ranking first in the industry. In 2014-2018, the company's spandex production capacity increased steadily from 20,000 tons to 80,000 tons, and spandex revenue increased year by year, from 704 million yuan to 1.94 billion yuan. In 2019, 40,000 tons of ultra-fine denier spandex production capacity were added to produce high-end spandex fibers with high temperature resistance, high stress, high resilience, and uniform and stable quality. The spandex production capacity reached 120,000 tons, accounting for 13.4% of the country, ranking first in the industry. The company uses its low cost advantage to occupy new market share and eliminate backward small enterprise production capacity. When the spandex industry returns, the company will be one of the biggest beneficiaries. Advanced production technology brings significant cost advantages, ensuring that the gross profit of core products is at the forefront of the industry. 70% of Xinxiang Chemical Fiber's viscose filament production capacity uses advanced continuous spinning technology, and the production cost is far lower than that of competitors in the industry. In 2018, the company's viscose filament gross profit margin was 19.4%, which is the leading level in the industry. The average gross profit margin of the company's viscose filament was 13.2% in 2008-2018, far higher than other companies in the industry. A new production line of 100,000 tons of spandex fiber has been built in the past 5 years, using COSCO Spandex (exclusive) advanced spinning technology and a new polymerization formula. The production cost is 2000-3,000 yuan/ton lower than other domestic production capacity. At the same time, the company built a 2 x 170 ton/hour steam boiler to satisfy itself while selling steam to the outside world, further reducing production costs. Profit forecast: The company's revenue for 2019, 2020 and 2021 is expected to be 4.95 billion yuan, 5.64 billion yuan, and 6.26 billion yuan. Net profit is 145 million yuan, 255 million yuan and 513 million yuan respectively, EPS 0.12 yuan, 0.20 yuan and 0.41 yuan, PE 30.4X, 18.4X and 9.1X, maintaining the “buy” rating. Risk warning: Macroeconomic downturn, project commissioning falls short of expectations, and demand falls short of expectations