Incident: Huaxing Chemical is mainly engaged in pesticide production, the most important of which is glyphosate and its upstream products. In addition, the company is also engaged in the production of dozens of original drugs and products such as pesticides, microbicides, and other herbicides. Recently, institutional investors conducted field research on the company and had in-depth exchanges with company executives. We judge that glyphosate prices are expected to rise early next year by considering the three aspects of demand, cost, and supply. The company will continue to expand the upstream and downstream glyphosate industrial chain, and scale advantages and cost advantages are prominent. Starting in the second half of next year, the real estate business will bring rich profits to the company. There is a possibility that next year's equity incentive will be exercised. Beginning in 2010, due to the implementation of equity incentives, the company's total share capital will increase from 244.88 million shares to 247.06 million shares. According to our forecast, the company's 2009-2011 EPS was 0.33 yuan, 0.71 yuan, and 1.29 yuan, respectively. Considering the company's technical advantages and position in the industry, we gave the company a target price of 17.75 yuan for 12 months. Based on comprehensive considerations, we maintain a “buy” rating for Huaxing Chemical.