Jiahua Energy: A leading enterprise in steam and thermal power. Based on a circular supply chain with cogeneration as the core, Jiahua Energy is mainly engaged in the manufacture and sale of steam, chlor-alkali, fatty alcohols (acids), sulfonated pharmaceutical products, and sulfuric acid series products. In recent years, the company's operating income and net profit have increased steadily, and the revenue and profit of major products such as fatty alcohols, steam, chlor-alkali, and sulfonated pharmaceuticals have steadily increased. The steam business is one of the main driving forces of the company's profit, and cogeneration capacity will be further released in the future. The steam business is based in the park. The compound growth rate of steam product sales volume and revenue in 2015-2018 was 7% and 14%, respectively. The company has an excellent location with excellent traffic conditions, and is the only steam heating enterprise in the Jiaxing port area. It also enjoys policy dividends; it also uses energy-saving and efficient production methods, cogeneration, to give full play to its environmental advantages. In the future, cogeneration capacity will be further released to meet the different needs of various enterprises in the park. As a leading sulfonated pharmaceutical company, the company insists on R&D innovation. The company is currently the manufacturer of sulfonated pharmaceutical series products with the most advanced domestic technology and a global scale advantage. The overall market for the company's sulfonated pharmaceutical products improved in 2019. The company has a number of independently innovated patented technologies, giving full play to cost and environmental advantages. Prices of PTSC and derivatives have been growing rapidly since 2017, driving the profitability of the company's sulfonated pharmaceutical series products to rise. The company continues to invest in new production capacity in sulfonated pharmaceutical products, decided to build a new continuous production unit for the 4,000 tons/year BA pipeline, and add supporting production capacity for the 30,000 tons/year sulfonation unit, which strongly guarantees the future development of products derived from the sulfonated pharmaceutical industry. Chlor-alkali products: Improve production processes, and the market pattern is improving. Currently, the national chlor-alkali industry continues to withdraw its backward production capacity, the concentration of the industry is constantly increasing, and the company's chlor-alkali business is improving. The company's chlor-alkali products make full use of the advantages of the company's cogeneration and its own power generation, reduce the overall cost of chlor-alkali, and occupy an advantageous position in competition with peers. Hydrogen energy: Accelerate the layout of the clean energy industry. Hydrogen energy is clean and efficient, and the prospects for industrial development are broad. The company has a cost advantage when entering the field of hydrogen energy. The company laid out construction in the field of hydrogen energy, reached a tripartite agreement with Air Chemical and Sanjiang Chemical to carry out comprehensive hydrogen-rich gas utilization project cooperation; the United Nations Hydrogen-rich Energy and Shanghai Remodeled to establish Jiangsu Jiahua Hydrogen Energy Technology Co., Ltd.; and the State Investment Cohesion to jointly establish an industrial fund; the company also signed a “Strategic Cooperation Framework” and a “Hydrogen Liquefaction Plant Cooperation Framework Agreement” with Zhejiang Energy Group to establish a hydrogen liquefaction demonstration plant. Profit forecasts and investment advice. We expect the company's net profit for 19-21 to be 1,404 billion yuan, 1,438 billion yuan, and 1,735 billion yuan respectively, corresponding to EPS of 0.91, 1.00, and 1.21 yuan, respectively. Referring to the valuations of comparable companies in the same industry, we believe that the reasonable valuation range is 13-15 times PE in 2020, and the corresponding reasonable value range is 13.00-15.00 yuan, giving it a “superior to the market” rating. Risk warning: Production capacity investment under construction has not met expectations, prices of fatty alcohols, chlor-alkali and other products have fluctuated greatly, and the macroeconomy is declining.