Key elements of the report: As a new materials company, Youyan New Materials has a diverse business scope. Its core business is high-purity metal materials/targets business and rare earth business. Among them, the main downstream semiconductor, flat panel, and solar cell industries corresponding to the target business have broad space, and the prospects are positive, which is expected to drive an increase in target demand, which in turn will drive growth in the company's performance. Investment points: The target materials business is growing rapidly, and the market prospects are broad: its subsidiary, Yuanyijin, is a leading domestic target enterprise, and has achieved vertical integration from high-purity metal production to target R&D and production. Its production and sales of high-purity/ultra-high purity metal materials have grown rapidly in recent years, and this portion of revenue and gross profit has maintained simultaneous growth. Looking ahead, the downstream target semiconductor, flat panel, and solar cell industries have a lot of room for growth, which will also drive the release of target demand. The price of rare earth is expected to be supported in the medium to long term: its subsidiary research rare earths is the main company for rare earth-related business, and the current production capacity of rare earth products exceeds 10,000 tons/year. Research's rare earth performance is closely related to rare earth prices. In the medium to long term, rare earth prices benefit from the increase in magnetic material consumption brought about by the growth of the NEV industry, and are expected to receive some support. Other new materials businesses are small in scale, but their profitability is relatively strong: other new materials businesses include optoelectronic materials, medical device materials, infrared optics, and optical fiber materials. This part of the business does not account for much of revenue, but has a high gross margin. The company has a high position in various segments, such as the largest supplier of infrared germanium in China. As the industry leader in the segment, it is expected to further benefit from the growth of the entire industry. Promote equity incentives and help the company develop: The company launched an equity incentive plan in 2017. Currently, the first assessment during the sales restriction period has been completed, and the conditions for unlocking are ripe. As the equity incentive plan progresses, the company's operating capacity and profitability are expected to be strengthened. Profit forecast and investment advice: We expect that in 19-21, the company's net profit will be 0.99, 1.26, and 132 million yuan, respectively, and EPS will be 0.12, 0.15, and 0.16 yuan/share, respectively. We are optimistic about the development of the domestic target industry, the recovery of the downstream rare earth industry in boosting demand for rare earths, and the impact of the company's equity incentive plan on the company's efficiency. Therefore, we give the company an “increase in holdings” rating. Risk factors: Construction of projects such as targets falls short of expectations, risk of fluctuations in rare earth prices