Investment highlights Performance summary: The company's 2019 revenue was 1,258 million yuan, down 11% year on year, and net profit to mother was 44 million yuan, up 100% year on year. The company plans to raise no more than 1.2 billion dollars for the construction of 30,000 tons of natural fragrance projects, the Brother Science and Technology Research Institute, and loan repayment; it plans to use its own capital of 290 million yuan to build a construction project with an annual output of 13,000 tons of vitamin B3 and 3,000 tons of fragrance and intermediates. The bottom of the company's profit stabilized. In 2019, the price of the company's vitamin products basically stabilized. Among them, the average price of VB3 was 43 yuan/kg, +22.86%, and the average price of VK3 was 84 yuan/kg, -2.32% year over year. VB5 prices were strong, the average price was 313 yuan/kg, +99% year over year, and the gross profit margin of the vitamin business was 37.57%, an increase of 7.43 percentage points over 2018. However, due to the impact of the Xiangshui incident, the suspension of production of the subsidiary Brother Vitamins dragged down performance. The first phase of the hydroquinol and derivatives project, the iodine contrast agent project, catalytic materials and pharmaceutical raw materials projects at the Jiangxi base are progressing at an accelerated pace, with 829 million projects under construction, +70% over the same period last year. In the vitamin boom cycle, the company ushered in an upward inflection point. The global pandemic has led to increased uncertainty in the supply of vitamins or raw materials, and various countries have progressed differently, lengthening the entire uncertain cycle. Demand for downstream vitamins is relatively rigid, and vitamins themselves are low in the amount added downstream and the proportion of cost is low. In addition, the vitamin industry is generally an oligopolistic competitive pattern, and vitamins have begun a round of continuous price increases. All of the company's vitamins rose significantly in 2020. The current price and year-on-year increase: VB1 (275 yuan/kg, +53%), VB3 (58 yuan/kg, +51%), VB5 (370 yuan/kg, +16%), and VK3 (92.5 yuan/kg, -5%). Considering the resumption of production of subsidiary Brother Vitamins and the commissioning of the Jiangxi base project, the company ushered in an upward inflection point. New projects have begun to be implemented, and there is plenty of room for future growth. The first phase of the hydroquinol and derivatives project includes 10,000 tons of phenol and 15,000 tons of hydroquinol derivatives (including 3,000 tons of vanillin, 2,500 tons of ethyl vanillin, etc.). Vanillin is a major global fragrance variety, and the market prospects are good. Iodine contrast agent production capacity is 1,000 tons, opening up new business areas for the company. At the same time, the company plans to build an additional 30,000 tons of natural flavors to create a complete turpentine industry chain. The future will continue to expand in the field of pharmaceuticals and perfumery, and there is plenty of room for future growth. Profit forecasting and investment advice. The company's net profit for 2020-2022 is estimated at 2.51, 3.38, and 407 million yuan respectively. The vitamin boom ushered in an inflection point in performance. At the same time, fragrances and contrast agents are expected to contribute to growth during the year. The future pharmaceutical and fragrance business will continue to lay out and maintain a “buy” rating. Risk warning: Demand for downstream feed declined; project progress fell short of expectations; vitamin prices fell sharply.