The two major droughts had little impact on the company, and the urea business maintained full production capacity. In the first quarter of this year, the drought situation in southwest China was severe and spread to the Liangguang region. The market is generally concerned about whether the company's urea business has been affected. According to research, the drought situation in Guangxi is mainly concentrated in Hechi, Baise and other regions, while the company's sales area is distributed in Liuzhou, Laibin, etc. Overall, the company's sales are stable, and there is basically no inventory. Currently, the shipping price of the company's urea is about 1,800 yuan/ton, and the gross margin is about 10%; currently, the price of urea in the Liangguang region is higher than that of North China and central China, so some mainland enterprises ship to Guangxi. Market competition is becoming increasingly fierce. However, since the company's urea is a famous local brand and has a high level of recognition among farmers, there has been no significant impact on the company's sales, and the urea business is still producing at full capacity, with good delivery. The ammonium nitrate, nitric acid and hydrogen peroxide business continues to maintain a high gross profit margin, which is currently the company's main source of profit. The three major products of nitric acid, ammonium nitrate, and hydrogen peroxide continue to play a major role in the company's profit structure. At present, the company produces 300,000 tons of ammonium nitrate per year (of which porous ammonium nitrate accounts for 1/3), with an average price of over 25%; the actual annual production of concentrated nitric acid is about 100,000 tons, the average sales price is more than 1,800 yuan, and the gross margin is about 30%; the construction of the hydrogen peroxide phase II project was completed in November last year. Currently, rare products (27.5% content) and concentrated products (50% content) have a combined annual output of 200,000 tons, with a profit of around 200 yuan per ton; the above products are the company's main source of profit and can contribute 2 million yuan to gross profit. As market demand continues to expand, the production capacity for ammonia synthesis and hydrogen peroxide will be increased by 100,000 tons each by the end of this year. In recent years, with the new construction and continuous expansion of pulp enterprises in Guangxi, demand for hydrogen peroxide has been increasing, especially since hydrogen peroxide is environmentally friendly, and there is a trend of gradually replacing chlorine gas in various fields such as bleaching and disinfection. Given the good sales situation of hydrogen peroxide, the company plans to expand hydrogen peroxide production to 300,000 tons by the end of this year, while at the same time expanding the production of synthetic ammonia to 100,000 tons. Profit forecast: With the full release of coal and hydrogen peroxide production capacity this year and next, and the traditional brand and regional advantages of ammonium nitrate and urea, plus expectations for future asset injection, earnings per share in 2010 and 2011 are expected to be 0.61 and 0.78 yuan respectively, giving a “buy rating”.