The results of the interim report fell slightly short of expectations: in the first half of 2009, Chengxing Co., Ltd. achieved sales revenue of 1,221 million yuan, a year-on-year decrease of 5.4%; main business profit of 17,400 yuan, a year-on-year decrease of 52.0%; and net profit of 33 million yuan in the first half of the year, a year-on-year decrease of 80.4%, or 0.05 yuan per share. Among them, the main business in the second quarter achieved sales revenue of 665 million yuan, a year-on-year decrease of 9.3%, a year-on-month increase of 19.8%, and a net profit of 014 million yuan, a year-on-year decrease of 90.6%, and a decrease of 30.0% over the previous year. The performance fell slightly short of our expectations. The main reason is that prices of phosphorus chemical products fell after entering a peak period in the second quarter, and at the same time, the impact of maintenance of the subsidiary Dongchuan Phosphorus Industry. Positive: The cost advantage of company integration is obvious, achieving operating cash flow of 225 million yuan in the first half of the year. Negative: Phosphorus chemicals are still sluggish at the bottom of the industry, have high debt ratios, and large financial expenses. Development trend: As the third quarter gradually enters a dry water period, the price of yellow phosphorus will drive the price of phosphorus chemicals back up, which is conducive to improving the company's profit. The bottoming out and rebounding in international phosphate fertilizer prices has also led to a slight recovery in phosphoric acid prices. Currently, the price of yellow phosphorus is around 11,000 yuan, and the price of phosphoric acid is 3,800 yuan/ton. Whether prices can rise further depends on international phosphate fertilizer and the recovery of the domestic economy. Valuation and recommendations: We lowered the company's 2009 EPS forecast by 20% to 0.18 yuan and the 2010 EPS forecast by 7.4% to 0.28 yuan, respectively. There are no obvious signs of recovery in the phosphorus chemical industry; we maintain a “neutral” rating.