Matters: The 2020 pandemic accelerated the company's microprism-type reflective film import and replacement. The epitaxial business quantum dot film is expected to turn a loss into a profit, and PC/PMMA film will be released. Guoxin Chemical's view: (1) The company is a leading domestic reflective material enterprise, and its business scope continues to expand. The company is a leading domestic reflective film company and the largest reflective material base in Asia. The company started as a reflective material and has accelerated to become a one-stop solution provider through fundraising projects and mergers and acquisitions. In recent years, the compound annual growth rate has exceeded 20%. The company's product structure has continued to improve. Under its technological advantages, the revenue and gross margin of the company's main product, reflective film, have continued to rise. (2) The company's reflective materials revolve around people and traffic, opening up growth space for stock replacement and import substitution. The company's domestic license plate film market accounts for 30%, and the incremental market has an annual market demand of 750 million yuan, and the stock market has a market of 4.5 billion yuan for the promotion of new license plates; in the road safety market, the company, as the only microprism reflective film manufacturer in China, currently has a market share of 10%. As product technology promotion companies are expected to continue to import and replace; in the personal protection market, the company is continuously adjusting its product structure and expanding into high-end fields. (3) Aluminum-plastic film technology has achieved a breakthrough, and the epidemic has accelerated the penetration of domestic enterprises into the market. Aluminum-plastic film is a material for lithium battery packaging. The downstream market is mainly in the 3C consumer electronics and power battery fields. There is a high degree of dependence on domestic aluminum-plastic film imports. The company has taken the lead in achieving technological breakthroughs. Currently, the annual production capacity has reached 15 million square meters, mainly supplying the consumer electronics sector. Currently, the company has entered well-known enterprises such as Tianjin Lishen and achieved stable supply. The epidemic has spawned a good opportunity for domestic substitution of domestic aluminum-plastic film. (4) Acquire new materials from Warwick to cut into LCD optical films. The company currently has an annual production capacity of 25 million square meters of LCD brightener film. In 2020, the company will expand its scale to reduce production costs, introduce Korean barrier films to reduce procurement costs, and improve yield through optimized processes. Under multi-faceted optimization and adjustment of the business, quantum dot film is expected to turn a loss into a profit. (5) PC/PMMA film has excellent performance, and is expected to become the mainstream backplane material for mobile phones in the 5G era. Currently, the company has an annual production capacity of 10 million square meters of PC/PMMA film products. The main target customers are well-known mobile phone back cover manufacturers such as Tongda Holdings, Intelligent Power, and Jinrui New Materials, which are expected to contribute to performance growth this year. Investment suggestions: The company is a leader in the domestic optical film industry. Currently, domestic license plates and road reflective materials are ushered in stock market replacement opportunities. The company uses its unique domestic technical advantages to speed up import substitution. Furthermore, the company continues to expand epitaxial into fields such as aluminum-plastic film, brightening film, and PC/PMMA composite film, and new projects are expected to continue to contribute to increased performance. The company is expected to have revenue of 1,670/20.97/2,545 million from 2020 to 2022, net profit of 2.82/3.69/448 million, and EPS of 0.45/0.59/0.72. The current stock price corresponding to PE is 21/16/13 times, maintaining the “buy” rating. Risk warning: 1. Chemical raw materials account for a large share of the company's product costs, and the risk that large fluctuations in raw material prices will affect the company's performance. 2. The company continues to expand new businesses, including the acquisition of shares in Warwick New Materials. The large expansion of the company's scale poses certain management risks. 3. The company's business has expanded many new products, and there is a risk that the development and production of new products will fall short of expectations. 4. The company's overseas revenue accounts for a relatively large share, and the risk that the overseas epidemic will continue to affect the company's exports for a long time.