Key investment points Leading aluminum grain refiners. Companies with leading market share in the world specialize in aluminum grain refiners. The domestic market share in 2013-2015 was 43.99%, 46.02%, and 43.35% respectively; accounting for 22.42%, 23.93%, and 23.66% of the global market share; for five consecutive years (2010-2014), it became the world's largest manufacturer of aluminum-titanium-boron (carbon) alloys. From fluorite ore mining - fluoride salt manufacturing - aluminum grain refining agents to achieve full coverage of the industrial chain. Currently, the company is the only professional manufacturer of aluminum grain refining agents with a complete industrial chain in the industry. The business covers upstream fluorite mining and fluoride salt manufacturing. The company has formed various fluoride products such as potassium fluorotitanate, potassium fluoroborate, and potassium fluoroaluminate that can be used by itself or sold abroad. By improving the industrial chain layout, the company strengthens its ability to control the source of raw materials and product quality, and helps manage costs. Potassium fluoroaluminate develops new applications, and the market space is expected to change qualitatively. The company will prepare potassium hexafluoroaluminate from the production of aluminum-titanium-boron alloys into potassium tetrafluoroaluminate, which can be used to completely or partially replace aluminum fluoride, a flux aid added in the aluminum electrolysis production process. Compared with aluminum fluoride, this technology can reduce the temperature of the electrolytic aluminum furnace by 50℃ and save at least 500 degrees of electricity per ton of aluminum. The economic benefits and energy saving and emission reduction effects are remarkable. Once the technology is fully implemented, the market space for potassium fluoroaluminate will grow from about 30,000 tons to nearly 280,000 tons. The company, as the technology owner, will be the first to profit. Breaking the shackles of production capacity and enriching the product structure, the market share is expected to further increase the company's aluminum grain refining agent's production capacity utilization rate of close to 108% for many years, and the production and sales rate is close to 100%, and production capacity has become a barrier to the company's development. Over the next three years, the company's various projects will be put into operation one after another. The fund-raising project alone will add 30,000 tons of aluminum grain refining agent production capacity, 60,000 tons of potassium fluoroaluminate production capacity, and 12,000 tons of high titanium iron. The company also plans to invest in the construction of a factory in Yanshi, Henan to increase the production capacity of aluminum grain refiners, aluminum-based intermediate alloys, and high titanium iron by 30,000 tons each. With the release of production capacity, downstream demand continues to grow, and the company's product market share is expected to increase further. Profit forecast and valuation We expect that in 2018-2020, the company will achieve operating income of 1,863, 25.04, and 2,978 billion yuan; achieve net profit of 2.51, 3.80, and 476 million yuan; consider the company's plan to transfer 10 shares for every 10 shares in 2018, corresponding EPS of 1.57, 2.38, and 2.98 yuan; and corresponding PE is 28x, 18x, and 15x. The company is the leading target in the scarce aluminum grain refiner segment in the two markets. With the gradual release of production capacity, performance will grow rapidly. Covered for the first time, a “gain” rating was given. Risk warning: 1) Fluctuations in the price of aluminum ingots adversely affect the unit price of the company's products; 2) Fluctuations in the price of other raw materials such as anhydrous hydrofluoric acid have adversely affected profits; 3) downstream market demand growth has slowed and production and sales rates have declined; 4) the progress of new production capacity in fund-raising projects falls short of expectations; 5) The development progress of the Yanshi project falls short of expectations; 6) macroeconomic and market fluctuation risks.