The company released its 2018 annual report Lily Flower released its 2018 annual report. In 2018, the company achieved operating income of 1,813 billion yuan, a year-on-year increase of 20%, and realized net profit attributable to shareholders of the parent company of 190 million yuan, an increase of 42.5% over the previous year. By product, the company's pigment business achieved revenue of 17.01 billion yuan in 2018, up 20% year on year, gross margin of 23.45%, up 3.03 pct year on year; the intermediate business achieved operating income of 83.28 million yuan in 2018, up 7.54% year on year, and gross margin of 16.85%, up 0.9 pct year on year. The price of the main products rose year on year, and the cost of the main raw materials also increased. The company's 2018 main operating data announcement showed that the average sales price of the company's main products in 2018 (excluding tax) all increased to varying degrees year on year. Among them, the Yonggu Yellow series was 55,192 yuan/ton, up 22.5% year on year, the Risor Red 57:1 series was 27,441 yuan/ton, up 18.6% year on year, and the Yonggu Red series was 72,859 yuan/ton, up 9.8% year on year. At the same time, the average purchase price of major raw materials (excluding tax) also increased in 2018. Purchase prices for ethanaphthol, 3,3 dichlorobenzidine, and CLT-acid increased by 19.8%, 54.3%, and 7.0%, respectively. The production capacity of the fund-raising project was released in an orderly manner, and the industrial chain layout continues to advance. The company's growth is expected. The annual report shows that the company's 5,000 ton environmentally friendly organic pigment project was tested in March 2018, and 3653 tons of environmentally friendly organic pigments were produced in 2018, achieving operating revenue of 127 million yuan; the 3,000-ton high-performance organic pigment project is expected to be officially put into production in June 2020. Industrial chain layout: On May 3, 2018, the company announced the acquisition of 55% of Foward Fine Chemical's shares in cash, entering the pearlescent pigment field. The annual report shows that by the end of 2018, Foward had produced 2,173 tons of pearlescent pigments; Forward plans to invest in a new pearlescent material production project in Xiantao City, Hubei Province to expand pearlescent pigment production capacity; in addition, the company plans to cooperate with Yinchuan sodium to invest in a 20,000 ton sodium metal project. Profit forecasts and investment suggestions are based on the assumption that the organic pigment industry is developing steadily, the industry pattern is gradually improving, and the company's new production capacity is gradually being released. We expect the company's earnings per share to be 1.11 yuan, 1.40 yuan, and 1.62 yuan respectively in 2019-2021, corresponding to the current stock price price-earnings ratio of 22.2 times, 17.6 times, and 15.3 times. Considering the company's leading position in the organic pigment industry and the company's growth, the average value of PE_TTM per share is 26.7 times that of listed companies. The PE valuation was 25 times, and the reasonable value of the corresponding company was 27.85 yuan/share, maintaining the “gain” rating. Risk warning 1. Prices of organic pigment products have fallen, and raw material prices have fluctuated greatly; 2. Downstream demand continues to be sluggish; 3. The progress of projects under construction falls short of expectations; 4. Major safety and environmental incidents.