Investment summary: The leader in the domestic reflective materials industry continues to expand market space. The company is one of the largest enterprises in the domestic reflective materials industry. It already has the R&D and production capacity of a full range of reflective materials, including glass microspheres and microprism-type reflective materials. In recent years, domestic reflective material companies represented by the company have risen rapidly, continuously seizing market share at home and abroad. The company's development began with glass microbead reflective materials, and currently has a production capacity of 30 million square meters per year. In recent years, it has benefited from an increase in market share in the field of license plate films and semi-finished products, as well as the gradual promotion of reflective vests, etc., and the company's glass microbead reflective materials business has maintained steady growth. The company is the only domestic enterprise that has broken through the technical barriers of microprism-type reflective materials. Currently, the domestic market share is only about 10%, and there is plenty of room for import substitution. The company currently has a production capacity of 10 million square meters/year. Since it was put into operation in 2016, its revenue growth rate is high and profitability is strong, which is the company's main performance growth point in recent years. There is a lot of room for domestic replacement of aluminum-plastic film, and the company continues to make breakthroughs. Aluminum-plastic film is one of the key materials with the highest barriers in the flexible packaging lithium battery industry chain. Currently, the global aluminum-plastic film market has been occupied by a few Japanese and South Korean companies for a long time, and the localization rate is less than 20%. Especially in the field of power batteries and energy storage, the core technology and products of aluminum-plastic film are monopolized by Japanese companies, and the gross margin of high-end products has reached 60% to 80%. The company has made a comprehensive breakthrough in aluminum-plastic film technology, and its technical level is in the leading position in the country. The current production capacity is 15 million square meters/year. It has entered a stable mass production stage in the second quarter of 2017. The company is actively expanding the middle and high-end markets to promote rapid growth in the aluminum-plastic film business. Acquired Warwick New Materials and entered the field of high-performance optical films. In September 2017, the company completed the acquisition of 100% of Changzhou Warwick New Materials, with a transaction price of 350 million yuan. The target is mainly engaged in the business of high-quality LCD backlight materials and die-cut components. Currently, the core products are brightening films and quantum dot films, with production capacity of 25 million and 3 million square meters per year, respectively. In 2019, the business performance of Warwick New Materials declined significantly due to multiple factors such as falling prices for its main product, brightening film. Prices of brightening film are expected to gradually rise from the bottom in 2020. At the same time, the company has also optimized the production process and sales plan for quantum dot films. It is expected that Warwick New Materials's performance will improve. Expand PC/PMMA materials and open up the 5G mobile phone market. In the context of the full popularization of technologies such as 5G communication, wireless charging, and NFC, the market has put forward new requirements for mobile phone backplane materials. PC/PMMA composite board backboard processing technology is mature, and the cost is only 20% to 30% of glass backsheets. It has become the best choice for backboard materials for middle and low end popular mobile phones, and the market space is broad. The company built a new PC/PMMA composite board production capacity of 10 million square meters per year. It is expected that partial production will begin in the second half of this year to contribute to the company's performance. Investment strategy: The company is the leader in reflective materials in China, and its market share continues to rise. At the same time, endogenous epitaxial continues to expand new varieties of functional film materials. The future development prospects are broad. We expect the company's EPS from 2020 to 2022 to be 0.41, 0.58, and 0.72 yuan respectively. The current stock price corresponding to PE is 22, 15, and 12 times, respectively, giving the company a target price of 11.1 yuan for six months. First coverage, giving a “buy” rating. Risk warning: product volume falls short of expectations, raw material price fluctuations, new project launch falls short of expectations