Matters On January 13, 2010, chemical industry researchers from Huacheng Securities visited Huaxing Chemical to conduct field research. I communicated with the company's securities affairs representative about the production and operation situation of Huaxing Chemical. Main point 1. The company's main business is expected to show good growth in 2010, and the production and sales volume of glyphosate, the company's main product, is relatively stable. In 2009, sales volume of glyphosate was more than 15,000 tons, and production was more than 16,000 tons, similar to sales volume in 2008. Huacheng Securities believes that there is a high possibility of a restorative rise in glyphosate. The price of glyphosate has shown a steady upward trend in recent months. It is expected that the price of glyphosate will rise further along with the rise in resource prices, and glyphosate is expected to bring good profits to the company in 2010. The company's other pesticide products bring stable profits. 2. Huaxing Chemical is an enterprise with leading technology in glyphosate. After years of repeated exploration, Huaxing Chemical has successfully independently developed a new process technology for producing diglyphosate using iminodiacetonitrile as the main raw material to produce diglyphosate through air oxidation. 3. The relocation and land development of the Huaxing Chemical Plant Area obtained benefits from various sources to obtain more than 1,500 acres of industrial land at a lower cost. The original more than 500 acres of industrial land were converted to commercial land, providing the company with land resources for future real estate development. After the old Huaxing Chemical factory was relocated, the county government was responsible for changing the industrial land in the old factory area to land for commercial development. The relocation cost of the old factory area is not high, and it will not affect the normal production of Huaxing Chemical. Huaxing Development seized the relocation opportunity to obtain better profits in the real estate industry, set up a real estate development company, and obtained land through auctions. The land appreciated relatively quickly. The transfer of some shares in the real estate subsidiary obtained profit, increasing the company's earnings per share in 2009 by 0.15 yuan. The real estate project is expected to sell the first batch of commercial housing in June 2010, which will be reflected in the 2010 financial statements. The county government gives other concessions on relocation matters. 4. Optimize the construction of new projects and improve the company's industrial chain. New projects are likely to significantly increase the company's profits Huaxing Chemical has four larger projects that are in the construction period or already have some conditions for putting into operation. On the one hand, these projects have improved the company's industrial chain, and on the other hand, increased the company's performance elasticity. Against the backdrop of rising glyphosate, the company's profits may be increased to a large extent. 5. It is very likely that the company will increase its issuance in 2010. Due to major changes in the market environment, the company's application for the 2008 IPO plan was automatically terminated on March 29, 2009. The company is more likely to issue additional issues in 2010. 6. Profit forecasting and investment recommendations The EPS for 2009 and 2010 is expected to be 0.33 yuan and 0.62 yuan (if real estate income is taken into account, the 2010 performance will be higher than our forecast). Considering the company's growth and the emergence of inflection points in the industry, a recommended rating is given.