Event: The company released its 2019 annual report and achieved operating income of 1,258 million yuan, a year-on-year decrease of 11.12%; net profit of 44 million yuan, a year-on-year increase of 100.88%. Single Q4 achieved operating income of 359 million yuan, an increase of 32.73% over the previous month, and single Q4 achieved net profit of 225 million yuan, an increase of 23.90% over the previous month. At the same time, the company announced the 2020 non-public stock offering plan, with a fixed increase of no more than 1.2 billion yuan to invest in natural fragrance projects, the construction of the company's research institute, and repay part of the loan. Furthermore, on April 16, the company's board of directors deliberated and passed the “Proposal on Investing in a New Construction Project with an Annual Output of 13,000 Tons of Vitamin B3, 3000 Tons of Fragrances and Intermediates”. The company plans to pay no dividends, no increase, or share transfers in 2019. Comment: African swine fever affects downstream demand for vitamin products, and price increases of calcium pantothenate and nicotinamide contribute major benefits. In 2019, due to the impact of China/Asian African swine fever, China's pig feed consumption declined to a certain extent. According to Wind, the prices of the company's vitamin varieties calcium pantothenate, nicotinamide and VK3 increased by 110.50%, 24.57% and 0.30%, respectively, compared to last year. The sharp rise in the prices of calcium pantothenate and nicotinamide is expected to contribute the main benefits. The fee rate for the period increased year over year, and profitability increased. Benefiting from a sharp increase in the price of calcium pantothenate, the company's gross margin and net profit margin in 2019 were 29.32% and 3.48% respectively, with a year-on-year ratio of +6.08pct and +1.94pct. The fee rate for the period was 26.87%, +7.24pct year-on-year. Among them, the sales expense ratio, management expense ratio (including R&D), and financial expense ratio were 4.14%, 20.58%, and 2.15%, respectively, +0.39 pct, +6.29 pct, and +0.57 pct over the same period last year. The plan is to raise no more than 1.2 billion dollars to build a natural fragrance project with an annual output of 30,000 tons, research institute construction projects, and repay part of bank loans. The natural fragrance project focuses on developing fragrance products such as dihydrolauryl alcohol, pine oil (terpinol), amberside, camphor, laurene, and isobornyl acetate to create a complete turpentine industry chain. The resumption of 2020Q1 vitamin B1 production combined with the bottom rise in prices of major vitamin varieties is expected to contribute to excess revenue. Brother Vitamins (VB1 production) is an important subsidiary of the company. In 2016-2018, it accounted for nearly 40% of revenue and more than 80% of net profit. The discontinuation of production of Brother Vitamins in 2019 had a great impact on the company's performance. In March, Brother Vitamins approved the resumption of production. Affected by the epidemic at the beginning of the year, the prices of the company's main varieties VB1/VK3/VB3/VB3 and VB5 increased by 35.22%/0.56%/33.51%/107.34% respectively in the first quarter. With stable sales volume, it is expected to contribute to the increase in performance. The sharp price increase for the company's main vitamin varieties occurred in March. The first quarter is expected to contribute part of the revenue, while the second quarter is expected to fully realize the price increase performance. The acquisition of LANXESS South Africa promoted the collaborative development of the company's business. LANXESS South Africa's main products include sodium dichromate, chromic acid, chrome tanning agents, etc., with operating income and net profit of 5300 million yuan and 486.79 million yuan respectively in 2018. Delivery has now been completed. The delivery date is January 10, 2020. The performance of subsidiaries was consolidated to increase the company's EPS. The company invested about 6 billion yuan in Jiangxi Jishan Industrial Park to lay out fine chemical business. (1) The annual production of 20,000 tons of hydroxyphenol and 31,000 tons of hydroxyphenol derivatives projects, focusing on the production of fragrance products mainly vanillin and ethyl vanillin (reaching sales revenue of about 714 million yuan, ten-year average annual net profit of about 91 million yuan); (2) contrast agent raw materials and intermediates projects (reaching sales revenue of about 970 million yuan and net profit of about 129 million yuan); (3) Construction of a natural fragrance project with an annual output of 30,000 tons (reaching sales revenue of 1,531 million yuan, net profit of 206 million yuan). As the Jiangxi project is gradually put into operation in 2020, it is expected to open up room for the company to grow. Profit forecast: We expect the company to achieve operating income of 2432.75/2975.19/3334.66 million yuan in 2020-2022, respectively; net profit of 257.06/445.89/503.58 million yuan, corresponding to PE, 21/12/11 times, respectively. Maintain a “buy” rating. Risk warning: Prices of vitamin products have declined; construction, production and sales of the Jiangxi Phase II project have fallen short of expectations.