1. Event Overview The company released its 2017 semi-annual report, with revenue of 722 million yuan, an increase of 55.62% over the previous year; net profit attributable to shareholders of listed companies of 61.57 million yuan, an increase of 10.49% over the previous year; and earnings per share of 0.09 yuan. 2. Analysis and judgment The dye business grew steadily. Qicaiyun e-commerce gradually improved the company's operating income of 722 million in the first half of the year, an increase of 55.62% over the previous year; net profit attributable to shareholders of the parent company increased 10.49% year-on-year. During the reporting period, the company strengthened sales of differentiated products such as highly washable disperse dyes and printing dyes and new dye products, leading to a year-on-year increase in the company's dye production and sales volume and performance growth. At the same time, Qicaiyun e-commerce channel construction was gradually improved in the first half of the year, and the operating income of the platform increased dramatically. The operating income of the platform increased by 16.8.9 million yuan over the same period last year. However, the gross margin of platform trade sales was low, resulting in a decrease of 6.91 percent in overall operating margin. The differentiation advantage between product and quality is obvious. The company with strong risk resistance currently has a production capacity of 36,000 tons of disperse dyes, which will gradually release production capacity according to market conditions and reach production in stages; the production capacity of active dyes is 8,500 tons. According to the company's plan, production capacity will increase to 20,000 tons. The company has a high market share in the market of differentiated disperse dyes such as disperse dyes for microfibers, high-washable dyes, low-temperature active dyes, and active printing dyes. Currently, the development of differentiated products mainly relies on the development of new fabrics. Currently, major international brands are continuously developing fabrics of different types and functions, and the R&D capabilities and business of large and medium-sized printing and dyeing enterprises are also constantly growing. Market acceptance and customer demand are increasing, and the market space for the company's differentiated dye varieties will also continue to increase. Shortfalls in upstream intermediates have been completed, and the company's dye industry chain layout tends to improve. The company invested 500 million yuan to build a fine chemical intermediate project with an annual output of 30,000 tons in the Beigou Industrial Cluster Park in Penglai City. This park is the only specialized chemical park approved by the environmental protection department in the Jiaodong Peninsula. Currently, some of the products in the project have been put into production. After full delivery, the estimated annual revenue of the project is 1 billion dollars. As market demand for high-imitation cotton and blended fabrics increases, the amount of dye intermediates used has increased dramatically, and prices are expected to continue to rise. As the Yantai intermediates project is put into operation, the integrated layout of the company's dye industry tends to improve. While improving profitability, it has also improved its ability to withstand risks. 3. Profit forecast and investment recommendations expect the company's EPS from 2017 to 2019 to be 0.22 yuan, 0.32 yuan, and 0.43 yuan respectively, and the corresponding PE is 30 times, 20 times, and 15 times, respectively. Maintain a “Highly Recommended” rating. 4. Risk warning: Dye prices are lower than expected, and there is uncertainty about the project's commissioning progress.