Event: The company released its 2017 semi-annual report, achieving revenue of 1,125 billion yuan, an increase of 30.69% over the previous year; net profit of 41 million yuan, a year-on-year decrease of 35.87%, corresponding EPS of 0.07 yuan. The company expects net profit of 0.52-074.5 million yuan from January to September 2017, a year-on-year decrease of 0-30%, corresponding to the 2017 Q3 net profit of 0.11-303.5 million yuan. Key investment points: Actively expanding main business sales volume and rapid growth 2017 H1 actively expanded global refrigerator and freezer customers. The sales revenue of hard foam composite polyether was 691 million, up 24.03% year on year; isopropanolamine sales increased more than 40% year on year, revenue was 364 million, up 42.71% year on year; insulation materials revenue was 210 million yuan, up 26.22% year on year. The rise in the price of propylene oxide has dragged down the decline in net profit. Currently, the company has a production capacity of 150,000 tons of hard foam composite polyether, 30,000 tons of special polyether, and 40,000 tons of isopropanolamine. Phase II of 50,000 tons of modified isopropanolamine will soon be put into production. The main raw materials are all propylene oxide, and the price of propylene oxide has a huge impact on the company's profit. The average price of propylene oxide in East China in 2017 H1 was 1,0100 yuan/ton, up 26.46% year on year, dragging down the 2017 H1 composite gross margin by 7.05 pcT to 15.55% year on year. The propylene oxide project is expected to be completed by the end of 2017. The company's 120,000-ton propylene oxide project uses a green and environmentally friendly isopropyl benzene co-oxidation method. At present, 70% of the project progress has been completed. After full production, it can achieve self-sufficiency in the existing product line of propylene oxide and enhance the company's profitability. Maintaining the recommended ratings We expect the company's 2017-2019 EPS to be 0.16 yuan, 0.36 yuan and 0.45 yuan respectively, and the corresponding PE is 41.30X, 18.30X, and 14.38X respectively. After the propane oxide project is put into operation, it can enjoy upstream profits and maintain the “recommended” rating. Risk suggests downturn in downstream demand; propylene oxide project falls short of expectations