The event company released its 2020 semi-annual performance forecast on July 13. The net profit for the first half of 2020 is expected to be 521-616 million yuan, an increase of 560%-680% over the previous year. The short review benefited from meltblown material. The company's performance reached a new high. The company's net profit forecast range corresponds to the Q2 performance of 452-547 million yuan, with a median value of 499 million yuan in the range, an increase of 957%-1178% over the previous year, and an increase of 551%-688% over the previous year. The company's performance increased significantly year-on-year, with significant year-on-year increases, mainly due to a sharp increase in Q1 gross margin and a 92% year-on-year increase in net profit, resulting in a high month-on-month basis. 2020H1's performance increased significantly year on year, mainly due to the impact of the COVID-19 pandemic. The company expanded production of meltblown materials for epidemic prevention materials. At the same time, some new products were put into production, and performance increased dramatically in the first half of the year. The mask industry chain is gradually returning to rationality. In the short term, the company's product polypropylene meltblown special materials are still needed to fight the epidemic. The company's sales revenue for polypropylene meltblown materials in 2018 was 183 million yuan, accounting for 18.83% of the parent company's operating income and 13.41% of the company's consolidated revenue. Since the outbreak of the epidemic, global demand for masks has increased dramatically, leading to a sharp increase in upstream melt-blown polypropylene demand. Currently, the global epidemic continues to progress. Although the shortage of mask supply has been alleviated, and prices throughout the industry chain are gradually returning to rationality, masks are still just needed to fight the epidemic in the short term. At the same time, TPV and IMSS are at the same time, the company expanding the automotive interior application market announced in January 2019 that it signed a cooperation agreement with Keteng. Keteng freely authorized Dawn Co., Ltd. to use a new thermoplastic elastomer production technology (IMSS) to inject flexible surfaces into automotive interiors. At the same time, Dawn Co., Ltd. procures from Keteng one of the polymer products required to produce this elastomer material (styrene elastomer). New thermoplastic elastomer technology (IMSS) for injection-molded flexible surfaces is an innovative solution for automotive interior skinning that is lightweight, environmentally friendly, and saves comprehensive costs. In the US, this technology has already been applied to Ford Fusion (US Mondeo) models. Currently, chlorine in vinyl chloride (PVC) blocking technology commonly used in China easily evaporates when the temperature rises, polluting the air inside the car. Today, when the mandatory national VOC standards for automobiles are becoming more stringent, it is gradually being replaced by TPV compression molding technology and IMSS technology. Compared with PVC, IMSS's injection molding capacity is increased by 5 times, which can effectively reduce the overall cost of production, and the product is more in line with the diverse styling requirements of automotive interiors, and has higher shock absorption, impact resistance, insulation, etc. As the leader of TPV in China, through this cooperation, the company can simultaneously occupy the two major technological highlands of TPV and IMSS, which is conducive to expanding the automotive interior application market, accelerating the replacement of PVC, and becoming a new performance growth point. High-tech technology leads TPV leaders and accelerates the deployment of thermoplastic elastomers TPV, a new type of polymer material that replaces traditional rubber, and is an important direction for the development of the rubber industry. The company is the first domestic enterprise in China to produce TPV using “complete pre-dispersion - dynamic full vulcanization” technology. The performance in all aspects is the same as that of high-end TPV imported from abroad; 60% of the TPV downstream use, 90% of the company's TPV products are for vehicles, which is significantly higher than the industry average. The company previously had a production capacity of 22,000 tons, and the 11,000-ton expansion project has been strengthened; at the same time, the company is actively exploring new fields, including automotive interior coating materials, new elastomer ADV materials for new energy vehicle water pipes, foaming agent TPV, and new tire gas barrier materials, etc., expanding production capacity At the same time, potential markets are expanded. In addition to TPV, the company's 10,000-ton TPU project was put into operation in 2018, the first phase of the 3,000-ton HNBR project of 1,000 tons has already been put into operation, and the 3,000-ton TPIIR project has been postponed until June 2021. HNBR targets import substitution in the high-end sector. As a high-margin product, the gradual expansion of HNBR will bring rich profits to the company. In terms of TPIIR, the company is the second company after ExxonMobil that can produce TPIIR and has independent intellectual property rights. It is mainly used to replace TSIIR in the medical rubber plug industry. After the TPIIR project is completed and put into operation, it will have a large customer base. In the future, the company will be deeply involved in the three major elastomer platforms (vulcanization platform, esterification platform, and hydrogenation platform) and adopt industry-university-research modular development to accelerate the process of new technology research and development-industrialization-commercialization; modified plastics will grow rapidly through epitaxial means, making the company a green composite material company with technology, characteristics, and competitiveness. The merger and acquisition of Haier New Materials to expand the level of business development In November 2018, the company announced that it would purchase 80% of Haier New Materials held by Yantai Xulisheng in cash. After the transaction was completed, the company directly held 80% of Haier New Materials, and Haier New Materials became a holding subsidiary of the company. On the one hand, Haier New Materials promised a total non-net profit of RMB 185 million in 2018-2020, and the company's 2016, 2017, and 2018H1 net profit was 2,478, 4,752, and 3053 million yuan respectively. Profits grew steadily, which will be a major support for the company's performance in the future; on the other hand, Haier New Materials is mainly engaged in the production and sale of modified plastics such as PP and ABS, which is an important complement to the company's business; at the same time, the company's product advantages and sales through Haier New Materials Channels can further enhance partnerships with downstream customers, expand product markets, and enhance the continuous profitability and overall competitiveness of listed companies. In June 2019, the company announced a convertible bond plan and plans to raise no more than 360 million yuan to build a 120,000-ton polymer materials project. The implementation of the project in Haier New Materials will further expand Haier New Materials production capacity and break through production capacity bottlenecks. It is estimated that the company's net profit in 2020 and 2021 will be 870 million yuan and 360 million yuan respectively, corresponding to PE 18 and 44 times, maintaining the increase in holdings rating. Risk warning: production safety risk, macroeconomic fluctuation risk, technology substitution risk, capacity release and digestion risk.