First-quarter results were in line with expectations: Chengxing Co., Ltd. announced the results report for the first quarter of 2009. The main business achieved sales revenue of 555 million yuan in the first quarter, down 0.3% year on year and 36.8% month on month. The main business profit was 87 million yuan, down 13.1% year on year and up 155.9% month on month. Net profit for the first quarter was 119 million yuan, a year-on-year decrease of 14.9%, reversing losses month-on-month, or 0.03 yuan per share. The performance is generally in line with expectations. (See Chart 1 for the analysis) Positive: Xuanwei's phosphorus-electricity integration project has started normally, and the cost advantage has already been reflected. Profit was achieved in the first quarter under the downturn in the industry. In the future, with the increase in the self-sufficiency rate of phosphate ore and the comprehensive utilization of yellow phosphorus exhaust gas, there is still room for further reduction in costs. Negative: The price of phosphorus chemicals is still sluggish, and it is difficult to rise sharply in the short term. The debt ratio is high. Development trend: The price of yellow phosphorus has dropped to around 13,000 yuan/ton. With the arrival of the peak season in the second quarter, it is expected that it will be difficult for the price to rebound. Prices of phosphoric acid and sodium pentasodium also declined slightly. There has been no substantial improvement in demand for phosphorus chemicals. The main technical reforms of Chengxing Co., Ltd. this year include continuing to invest in the recycling of Xuanwei's yellow phosphorus exhaust gas and slag phosphates, increasing the self-sufficiency rate of Xuanwei's phosphate ore mining, and recycling of waste phosphoric acid steam from the headquarters. After the completion of the phosphorus-electricity integration process in the Yunnan mine, the company already has long-term competitiveness due to relatively good downstream refinement technology. Valuation and recommendations: Maintain “neutrality” and maintain the forecast for the company's earnings of 0.23 yuan and 0.30 yuan per share in 2009 and 2010. Currently, valuations are too high, and remain “neutral.” However, the company already has the competitiveness of the industry in terms of resources and costs, and the industry is at the bottom, awaiting an opportunity for the recovery of industry prosperity and a further reduction in the company's comprehensive costs.