Company announcement: It plans to invest in the construction of a PBAT biodegradable plastic project with an annual output of 60,000 tons. The project investment amount will not exceed 320 million yuan. The construction period is 15 months. It is expected to be completed and put into operation by June 30, 2021. Embracing the blue ocean market for degradable plastics, we hope to create another Ruifeng! On January 19, 2020, the National Development and Reform Commission and the Ministry of Ecology and Environment issued “Opinions on Further Strengthening the Control of Plastic Pollution”: “By the end of 2020, China will take the lead in banning and restricting the production, sale and use of some plastic products in some regions and fields. By the end of 2020, the consumption of disposable plastic products will be significantly reduced, and alternatives will be promoted.” Biodegradable plastic products are considered the most effective solution to eradicate the “white pollution” of disposable plastic products. The company's current PBAT biodegradable plastics project was obtained through independent R&D and technical cooperation from the company's research center. It has now passed the pilot test, and the product performance has reached the international advanced level, in line with relevant national industrial policies and the company's strategic development direction. The biodegradable plastics market has broad prospects, and the company is expected to seize the development opportunities of the industry. After all projects have achieved production results, it is expected to achieve operating income of 1.2 billion yuan, profit and tax of 250 million yuan, which is expected to create another Ruifeng! New projects will be put into operation one after another in the first half of the year, and the company's competitiveness will continue to strengthen. At present, the company has the largest production capacity of MBS products in China and second in the world (after Kanegawa in Japan). The first phase of the 40,000-ton MBS impact modifier project (annual output of 20,000 tons) is expected to be put into operation by the end of April this year. At that time, the company's MBS production capacity will reach 50,000 tons, and the domestic market share is expected to reach more than 50%, further consolidating its leading position in the industry. MBS products have a high technical threshold and are mainly used in the fields of consumer packaging and pharmaceutical packaging. In recent years, downstream demand has maintained a steady growth trend. The first phase of the company's 40,000 tons/year MC impact modifier project (annual output of 20,000 tons) was put into operation in the fourth quarter of last year. The second phase of the project (annual production of 20,000 tons) was originally scheduled to be put into operation by the end of March this year, but due to the impact of the epidemic and project procedures, etc., the commissioning time was delayed; the 20,000 ton epichlorohydrane project was a supporting project for the company's 40,000 ton MC project, which was originally scheduled to be put into operation before the end of March this year, but due to the impact of the epidemic and the supporting facilities of the project, production time has also been delayed, and is expected to be put into operation in the first half of the year. The company's comprehensive production capacity and profitability are expected to reach a new level. Profit forecast and investment rating: As a leading company in the PVC additives industry segment, the company continues to release production capacity such as MBS, MC, ECH, etc., and invest in the construction of PBAT projects, which is expected to bring high growth to the company and maintain the “increase in holdings” rating. Affected by the epidemic and project procedures, the company's new projects such as MC and ECH were built later than expected. Affected by the trade war and the spread of the international epidemic, domestic and overseas terminal demand fell short of expectations, so the profit forecast was lowered. It is estimated that the EPS for 19-21 will be 0.33, 0.44, and 0.62 yuan (0.34, 0.67, and 0.78 yuan before adjustment), and the corresponding PE is 22, 16, and 12 times. Risk warning: Product prices have fallen, raw material prices have fluctuated greatly, and construction of new projects has fallen short of expectations.