In 2020, the company realized a net profit of 176 million yuan, + 18.36% compared with the same period last year, and deducted 120 million yuan from non-net profit, which was-18.66% of the same period last year. The company's net profit of Q1 in 2021 was 60 million yuan, which was + 235.97% compared with the same period last year, exceeding market expectations. The first quarter is the traditional off-season in the tape market, and the company's Q1 net profit remains strong in the off-season, mainly due to the commissioning of a number of new production lines and an increase in government subsidies. We expect the company's full-year results to achieve a breakthrough and maintain a "buy" rating.

Q1 performance in 2021 is not weak in the off-season, and it is expected that the annual performance will achieve a breakthrough. In 2020: the company realized home net profit of 176 million yuan, + 18.36% compared with the same period last year, deducting non-net profit of 120 million yuan,-18.66% compared with the same period last year. The decrease in deducted non-net profit is mainly caused by the company's export revenue accounting for more than 60% and the continuous appreciation of RMB against the US dollar. however, the company promptly uses foreign exchange derivatives and hedging tools to guard against exchange rate risk, and adjusts its strategy in Q4 to cope with the price increase of raw materials, and the annual results are in line with expectations. Q1 in 2021: the company realized net profit of about 60 million yuan, + 235.97% compared with the same period last year, of which 42 million yuan was deducted from non-net profit, which was + 83.96% compared with the same period last year. The performance exceeded market expectations, mainly due to the smooth production of BOPP film drawing line and film-based tape production line of Q1 company in 2021 and the increase in government subsidies received by the company. Considering the substantial increase in deduction non-profit, we expect that with the arrival of the peak season of traditional sales in the second quarter. The company's annual performance is expected to achieve a breakthrough.

Traditional business: the expansion of OPP tape is accelerated, and the production of PVC tape is put into production ahead of schedule. (1) Film-based adhesive tape: the annual production and sales volume of film-based tape in 2020 is respectively 2.00 million 1.95 billion square meters, which is + 49.23% and 48.84% respectively over the same period last year, and the unit selling price / cost is 0.55 and 0.52 yuan per square meter respectively, which is-14.73% and 11.26% respectively over the same period last year. The increase in production and sales is mainly due to the early commissioning of 3 new OPP coating production lines in 2020 and the PVC project. We expect that with the formal commissioning of the company's BOPP film drawing line this year, the film-based tape business will continue to expand production. (2) cloth-based adhesive tape: the production and sales volume in 2020 is 140 million square meters, which is + 0.69% and 0.29% respectively over the same period last year, and the unit selling price / cost is 2.55 yuan / square meter and-1.83% and 0.51% respectively over the same period last year, which is basically stable. (3) Paper-based tape: the production and sales volume of paper-based tape in 2020 is 488 million square meters, which is + 7.96% and 3.06% respectively compared with the same period last year, and the unit selling price / cost is 1.34 yuan / square meter and-2.3% and 3.96% respectively over the same period last year, which is basically stable.

High-tech business: automotive tape & medical tape & biodegradable field. The company actively arranges high-end adhesive tape. In terms of progress, automotive wire harness tape is currently entering domestic car companies through business contact, sample delivery, certification and other links, and structural adhesive is in the stage of R & D and trial production. At present, medical adhesive tape has been put on record for the first class of medical devices, and the GMP quality system certification is expected to be completed in mid-2022. We expect that wire harness, medical tape / degradable project will contribute at least 200 million yuan in net profit in the medium and long term, of which wire harness, medical tape / degradable tape will contribute profit in 2022 pm 2023 respectively. The company's whole industry chain development strategy not only enriches the product structure system, but also creates a new growth point for the company's sustainable profits, and further strengthens the company's leading position in the viscose tape industry.

Risk factors: the risk of fluctuations in raw material prices; the risk that overseas sales are lower than expected due to the COVID-19 epidemic; the release of new production capacity is not as expected; and downstream demand growth is not as expected.

Investment suggestion: considering the company's short-term accelerated expansion and the expectation that the company's medium-and long-term high-end projects will gradually fall to the ground, we are optimistic about the company's traditional business expansion advantage + active layout of high-end areas. It is expected that the company's leading position in the domestic adhesive tape industry will be further strengthened, and short-term performance is expected to achieve a breakthrough. We raise the company's 2021-2022 net profit forecast to 2160.265 million yuan (the original forecast is 197pm 266m yuan), corresponding to the EPS forecast of 1.30pm 1.59 yuan, the new 2023 net profit forecast is 346 million yuan, and the corresponding EPS forecast is 2.01yuan. With reference to the current comparable company and historical valuation level, and considering the growth of the company, the company is given 23xPE in 2021, corresponding to the target price of 30 yuan (maintenance), to maintain the "buy" rating.