The main business of Liuguo Chemical is stable. The company is located in Tongling, Anhui, where sulfuric acid resources are abundant and the cost is low; furthermore, the geographical location is superior, and transportation has certain advantages over southwest phosphate fertilizer enterprises; the company has adopted a local direct sales model to actively explore the market. Staying away from ore resources has become a bottleneck in the company's development. The company is actively seeking diversified development directions. The main business is stable. The company's 440,000 tons of diammonium and 600,000 tons of compound fertilizer (which can be converted to diammonium at any time) plants can be produced at full capacity for the rest of the year except for about 40 days of maintenance every year, and sales and revenue increased steadily from 07-09. In 2009, the company produced about 500,000 tons of diammonium and compound fertilizer. In the first quarter of '10, demand for diammonium improved markedly compared to the same period in 2009. The company's sales volume and prices all increased, and the first quarter results can be expected. The company's “on-site direct sales” model transports chemical fertilizers to sales regions for storage in advance to ensure timely fertilizer supply; provides profit guarantees for sellers; more than 100 sales staff travel for about 300 days a year, are stationed in sales regions, cooperate with first-level dealers to develop markets, and provide timely feedback to the company on market information. The company adjusts product production plans based on this. The company's brand effect and the adoption of a “point-based direct sales” business model guarantee the company's stable sales volume. The cost advantage of sulfuric acid is obvious, and the geographical location is superior. Tongling pyrite is rich in resources. Currently, the company's purchase price of sulfuric acid is about 350 yuan/ton, which is 40% lower than the market price in other regions of the country. The company signs a purchase agreement for 700,000 to 800,000 tons of sulfuric acid with Tongling Nonferrous Metals every year. Prices are determined through quarterly negotiations according to market conditions. When prices fluctuate greatly, the purchase price of sulfuric acid can be temporarily negotiated every month. In addition, about 400,000 tons of sulfuric acid were transported from the neighboring Huaxing Chemical Pipeline to the factory. The price was based on Tongling Nonferrous Metals. The company has an excellent geographical location. Chemical fertilizer products are transported by rail to all provinces in China. We estimate that compared to southwest phosphate fertilizer companies, the company can save about 2,000 kilometers and reduce transportation costs by about 75 yuan/ton when shipping to the northeast. The company relies on the Yangtze River to transport bulk raw materials such as phosphate ore directly into the factory. Targeted additional distribution projects stabilize the main business. Ore resources are a bottleneck in the company's development. Currently, more than 80% are procured from Yichang, Hubei, and shipped from the Yangtze River to the factory. The cost to the factory is about 480 yuan/ton, and another 20% is procured by Guizhou and Yunnan. The company has established long-term good cooperative relationships with ore production areas. The company mixed Yungui with Yichang ore to reduce the magnesium content. The company's consumption of one ton of diammonium ore was about 1.6 tons, lower than the industry's use of 1.7 tons of ore. In the 2007 targeted expansion project, Susong's annual output of 800,000 tons of phosphate ore can be tested for mining in the middle of this year. After full production, it is equivalent to 35-400,000 tons of 30% grade ore, and the cost to the factory is about 350 yuan/ton. We expect the company's annual ore demand to be 1.4 million tons. After the Susong mine is put into operation, the company's average ore cost will drop to around 440 yuan/ton. This level is still significantly higher than that of phosphate fertilizer companies in Yunnan and Hubei. As a result, the company currently has no plans to continue expanding the production capacity of phosphorus compound fertilizer. The company plans to issue no more than 1.2 billion yuan to build a 280,000 ton liquid ammonia project, announcing that the construction period is 24 months. The project will be built in the annex to the factory area. After completion, the company can reduce the cost of purchasing liquid ammonia and transportation costs for the company. Seek diversified development. The company cooperated with Sichuan University to build a 50,000-ton industrial grade wet phosphoric acid purification project that can be put into operation by the end of this year. We estimate that the gross profit of the project is around 30%, and the profit level is far higher than that of phosphate fertilizer. This project can increase the company's EPS by about 0.03 yuan. We believe that the Tongling Xinke subsidiary announced by the company in March will likely undertake the company's industrial-grade phosphoric acid business and develop into the higher-end phosphate field.