Incident: Xinlun Composites, a wholly-owned subsidiary of the company, and Funeng Technology signed a 2019 aluminum-plastic film product procurement agreement. The two parties agreed that the supply demand for aluminum-plastic film products in 2019 is 8 million square meters, and Xinlun will give priority to guaranteeing Funeng's demand according to Funeng's demand plan. Main views: 1. A procurement contract was signed with Funeng, and the sales volume of aluminum-plastic film is expected to increase significantly in 2019. Funeng Technology is a leader in soft pack batteries for power in China. Funeng expanded the 20 GWh battery production line in Zhenjiang in 2018. It is expected that production will be put into operation one after another in '19. As production capacity is released, demand for aluminum-plastic film will increase rapidly. Xinlun is the first supplier of Funeng aluminum-plastic film, which will directly benefit. In 2018, the company's market share of power battery aluminum-plastic film was over 70%, and it has become the exclusive or main aluminum-plastic film supplier for well-known soft pack power batteries, including Funeng Technology, Jiewei Power, Weihong Power, Kanai New Energy, CITIC Guri, Sandton New Energy, and Polyfluoride. The first phase of the 3 million square meter/month production line of the Changzhou aluminum-plastic film factory was officially put into operation in Q4 '18. The output is expected to be close to 500,000 square meters in January 2019, and batch supply will be achieved in Q2 '19. The total shipment volume of Japan's Mie and Changzhou plants in 2019 will be no less than 30 million square meters, doubling year-on-year growth. Moreover, with the advantage of scale, the gross margin of aluminum-plastic film is expected to increase. 2. Release of high-end functional materials, and the acquisition of Qianhong Electronics brings synergistic effects. The company is Apple's only supplier of adhesive tape raw materials in China, accounting for about 10% of Apple's tape procurement volume. With the further introduction of new material numbers, it is expected that the tape business will continue to grow rapidly in 2019. With strong high-end customized tape capabilities, and the synergy brought about by the merger and acquisition of die-cutter Qianhong Electronics, the penetration into domestic mobile phone manufacturers, including OV, will further increase in 2019. 3. The optical film will open up space for the company's future growth. The Changzhou Phase III optical film project is the company's main strategic direction in the future. The optical film market space is vast, and the company focuses on high-end products such as automotive explosion-proof films, CPI, and polarizer films (TAC, COP). The company's two production lines were officially put into operation in November '18, and it is expected that another 3 production lines will be put into operation in March '19. 4. Profit forecasts and ratings expect the company to achieve net profit of 452, 6.47, and 920 million yuan in net profit in 2018-2020, with an EPS of 0.39, 0.56, and 0.80 yuan, and corresponding PE of 27X, 19X, and 13X. First coverage. Based on the 19-year 30X valuation, the target price is 16.8 yuan, with a “buy” rating. Risk warning: sales of adhesive tape and aluminum-plastic film fell short of expectations