Kangda New Materials is mainly engaged in R&D, production and sales of adhesive products, including epoxy adhesives, polyurethane adhesives, acrylic adhesives, SBS adhesives, etc. The products are widely used in wind power blade manufacturing, soft material composite packaging, rail transit, marine engineering, automobiles, etc. The company completed the acquisition of BIC Technology in 2018, then increased its capital to Bohang Aerospace and Sea, and recently launched the acquisition of Jing Hanyu to steadily advance the “new materials+military” dual-business driven development strategy. Wind power is rushing to install, and the short-term growth of epoxy adhesives is strong: the company sold nearly 9,000 tons of epoxy structural adhesives for wind power blades in 2018, accounting for 41% of total adhesive sales, and the domestic market share in the field of structural adhesives for wind power is about 60%. Onshore wind power is basically determined in 2020: According to the new policy of May 2019, onshore wind power projects approved before the end of 2018 will not be subsidized by the state. The power generation group will focus on completing project tenders in 2019, and is expected to complete large-scale installation and grid connection in 2020. The early installation of offshore wind power in 2021 is basically determined: offshore wind power projects approved before the end of 2018 can only be connected to the grid before the end of 2021 to implement a feed-in tariff of 0.85 yuan. Starting in 2020, new offshore wind power projects will no longer be included in the scope of central financial subsidies. The power generation group will begin to speed up the construction progress of the project in 2019, and the grid connection period is expected to be in 2021. The company's overseas market expansion is expected to bring new driving force to the growth of wind power structural adhesives: the overseas market space is huge. The company is actively promoting business connections with internationally renowned wind power manufacturers Vestas and Gamesa to enter the international market. Vestas and Gamesa are the world's first and second largest wind turbine manufacturers. Entering the military inspection industry and improving the “new materials+military” layout: In December 2019, the company announced that it would gradually acquire 100% of Jing Hanyu's shares. The first acquisition in 2020 will hold 51% of Jing Hanyu's shares after completion. The overall acquisition process will begin in 2021. It is expected to issue shares to purchase assets and raise supporting capital. Jinghan Yu is mainly engaged in the inspection business of military electronic components. The inspection targets mainly include integrated circuits, crystal oscillators, resistors, capacitors, inductors, etc. Jinghan Yu's testing capabilities, categories, and throughput are all in the leading position in the industry. The promised non-net profit deducted for 2020-2023 was 92 million yuan, 106 million yuan, 122 million yuan, and 142 million yuan, respectively, with an annual growth rate of more than 15%. We believe that the electronic component inspection industry has an excellent track. It is expected that military equipment expenses will continue to grow rapidly in the future, leading to a continuous increase in corresponding inspection demand. Profit forecast: The company's net profit for 2019-2021 is expected to reach 1.39, 1.42, and 200 million yuan, respectively, covered for the first time, giving it a “buy” rating. Excluding the impact of depreciation and employee shareholding expenses in 2020, as well as significant non-recurring income in 2019, net profit due to mother in 2020 is estimated at $167 million, +35% year over year. Using the segmented valuation method, we gave the company a target market value of 4.64 billion yuan in 2020 and 6.55 billion yuan in 2021 based on the evaluation results (not taking into account the 2020 and 2021 merger dates of Jinghan Yu). Risk warning: Jinghan Yu's acquisition progress falls short of expectations, fluctuating raw material prices, risk of impairment of goodwill, etc.