Rikoku Chemical is a major phosphate fertilizer production enterprise focusing on development in China. It has a diammonium production capacity of 1 million tons, of which 600,000 tons can be converted to compound fertilizer at any time. Ammonium phosphate production ranks among the top 5 in China, and has been growing year after year. The company's sales model is effective and the geographical location is superior, but the upstream raw materials are mainly outsourced, and resource bottlenecks limit the development of the company's main business. The “six countries” brand effect accumulated over many years and the “on-site direct sales” model have guaranteed the company's steady growth in sales levels, and the “on-site direct sales” model has also kept the company's accounts receivable at a low level in the industry. Tongling has an excellent geographical location. Compared with the southwest region, railway transportation to Shandong and Henan, the major grain-growing provinces, and the slightly farther northeast region can reduce the mileage by about 2,000 kilometers. The bottleneck of upstream raw materials limited the company's development. Since 2007, the company's gross margin of diammonium has been lower than that of other companies in the industry. Mainly due to excessive domestic ammonium phosphate production capacity at this time, the disadvantages of the company's large-scale outsourcing of raw materials have become apparent. Tongling is rich in sulfuric acid resources, and the company has a procurement price advantage, but it still has to bear the risk of price fluctuations. More than 80% of the phosphate ore is harvested from Yichang, Hubei. Procurement and transportation costs are high, and ore resource bottlenecks directly limit the company's development. Susong phosphate ore was put into trial production in the middle of this year, reaching about 400,000 tons/year of concentrate that can be mined after production. We estimate that the average cost of the company's ore can be reduced to 450 yuan/ton, which is still higher than that of other companies in the industry. The proposed 280,000 ton ammonia synthesis project will reduce the company's liquid ammonia cost from the current 25,000-2,600 yuan/ton to 1900-2000 yuan/ton, fundamentally solving the problems of the company's high procurement costs of liquid ammonia and safety hazards in long-distance transportation, which will benefit the company's long-term development after 2012. Domestic ammonium phosphate production capacity is overcapacity. Under the influence of multiple adverse factors such as new construction capacity continued to grow; large inventory replenishment was completed at the end of 2009; China's tariff restrictions on the export of phosphate fertilizer, we do not expect domestic ammonium phosphate prices to rise significantly in 10 years, and industry profits will remain at a low level. The company's investment in a wet phosphoric acid purification project may become a highlight for future development. The 50,000 ton industrial-grade wet phosphoric acid project can be put into operation by the end of this year. We estimate that the profit level of the project should be higher than phosphate fertilizer. After that, the 20,000 ton food-grade phosphoric acid project will be put into operation at an optional date. If successful, the company may develop into a higher-end and larger scale phosphate purification field. We forecast the company's EPS of 0.39 yuan and EPS of 0.40 yuan in 10 years (before expansion and dilution). The current stock price has basically reflected future expectations, giving it a “neutral” rating for the first time.