Key investment points are leading anthraquinone dyes, and profitability is stable. The company has been deeply involved in the dye field for many years and has formed a complete product chain self-supporting system. The key intermediates satisfy self-production and use. It has a production capacity of 37,000 tons of disperse dyes, 14,000 tons of reduced dyes, 2,500 tons of solvent dyes, and 50,000 tons of dye intermediates. The company has a market share of more than 35% in the anthraquinone dye segment, ranking first in the industry for many years, and has a market share of over 50% in the field of anthraquinone disperse dyes, which is an oligopoly. With strong product pricing power and cost advantages brought about by industrial chain integration+park circular economy, the company's profitability has been stable over the years. The impact of the environmental incident in northern Jiangsu has been gradually eliminated, and the company is about to resume production. Affected by the environmental incident in northern Jiangsu, the company has been in a state of discontinuation of production for a long time since the second quarter, and can only operate by consuming dye stocks. The company has recently issued an announcement. It is expected that most of the company's production capacity will gradually resume production in the near future, the impact of environmental incidents will gradually be eliminated, and the company's business performance will gradually be on the right track. The company's cogeneration project can be expected to be profitable. The company's thermal power project was put into operation in October '17. It has a 3×130t/h high temperature and high pressure circulating fluidized bed boiler and a 2×B15MW unit, which can generate 3.67 million GJ of heat and 200 million kilowatt-hours of electricity every year. In December '17, an explosion occurred at Juxin Biotechnology Co., Ltd. in Lianyungang Chemical Park. All enterprises in the park stopped production, affecting the profit release of the company's thermal power project. On April 28, '18, enterprises in the park stopped production again for rectification. Recently, discontinued enterprises in the park have completed inspections one after another, and it is hoped that production will gradually resume. The project is expected to contribute an average of 298 million yuan in annual operating income and 76 million yuan in net profit. It is expected to return to 50% load in '18. Acquire Hang Lung Crops and lay out a new field of pesticides. The company acquired 70.60% of Hang Lung Crops's shares and entered the pesticide industry. Hang Lung Crops sells more than 7,000 tons of pesticides a year, with sales revenue of 830 million yuan and net profit of 92 million yuan in 2017. The estimated sales revenue for 2018 is 850 million yuan and net profit is 89 million yuan. Hang Lung Crops is expected to rely on the company's capital platform for rapid development and provide new performance growth points for the company. The Lianyungang base guarantees the future development of enterprises. The Lianyungang Chemical Industrial Park provided the company with 1,000 acres of park land to ensure the future expansion of the company's production capacity. Currently, the first phase of 200 acres of land plans to build 20,000 tons/year peroxide series products and 10,000 tons/year benzophenone products. It is planned to expand into the pigment industry chain in the future, continuously opening up new growth points for the enterprise. Risk factors: 1. The risk of a sharp rise in the prices of upstream raw materials; 2. The risk of a sharp drop in the prices of anthraquinone dyes and intermediates; 3. The risk that new projects will not advance as expected. Profit forecast, valuation and investment rating: Affected by environmental protection regulations, the supply side of the dye industry continues to shrink, downstream demand is picking up, and the supply and demand structure has improved markedly. We expect the gross margin of the company's products to remain high (about 50% for dyes and 40% for intermediates). Through 17 and 18 years of environmental reform, the company's operating load is expected to return to normal levels in '19 (50% to around 80%), and profits will increase dramatically. Based on this, we forecast the company's net profit for 2018/19/20 to be 561/883 million/941 million yuan, respectively, and the corresponding EPS is 0.97/1.53/1.63 yuan, respectively. Referring to comparable company valuations and profit levels after normal resumption of work in 2019, we gave the company 14 times PE in 2019, corresponding to the target price of 21 yuan, covering the “buy” rating for the first time.