Key investment points: In the first half of 2009, the company achieved operating income of 1,221 billion yuan, a year-on-year decrease of 5.4%, net profit of 32.8 million yuan, a year-on-year decrease of 80.36%, and earnings of 0.05 yuan per share. The low prices of the main products and the sharp decline in gross margin over the previous year were the main reasons for the company's poor performance in the first half of the year. In the first half of the year, the gross profit margin of yellow phosphorus products was 11.53%, down 18.87 percentage points from the previous year; the gross profit margin of phosphoric acid was 17.44%, down 16.24 percentage points from the previous year; and the gross profit margin of phosphate was 11.81%, down 8.18% from the previous year. Prices of phosphorus chemical products have experienced a sharp decline since September last year, and are still in the bottom zone, with no significant rebound. The decline in the prosperity of the international phosphorus chemical industry is the main reason for suppressing the rise in the prosperity of the domestic phosphorus chemical industry. Prices of international phosphorus chemical products have fallen sharply to a level similar to domestic ones. Although the country has abolished special export tariffs on phosphoric acid and yellow phosphorus since the end of last year, export profits have declined sharply because the domestic and foreign price differences are already small. As for the phosphorus chemical industry, we think there will be a gradual recovery. First, seasonal factors; second, the implementation of the yellow phosphorus industry entry system. The profit forecast results show that the company's earnings per share in 2009, 2010, and 2011 were 0.13, 0.26, and 0.31 yuan respectively, and the corresponding price-earnings ratios were 52.9, 25.2, and 21.3 times, respectively. We believe it is more appropriate to give the company a price-earnings ratio of about 30 times that of 2010, and the corresponding reasonable stock price is 7.8 yuan. Give a “Recommended” rating.