Performance summary: The company achieved operating income of 810 million yuan in the first half of 2018, up 10.7% year on year; realized net profit of 150 million yuan, up 34.6% year on year; net profit after deduction of 150 million yuan, up 30.5% year on year; net cash flow from operating activities was 230 million yuan, up 160.2% year on year; EPS 0.85 yuan, ROE 9.6%. The company is number one in the probiotics industry and has outstanding competitiveness. The company's business is mainly divided into pesticides and flame retardants. Pesticide products are mainly chloroproxil, pyrimidine and other products (including original drugs such as desmectin, fluoride, cyanuric acid, etc., as well as pesticide intermediates such as tetrachloro-2-cyanopyridine and tetrachloroterephthalonitrile). Among them, perchloroterephthalene has the highest production capacity in the world. Flame retardants mainly include decabromodiphenyl ethane, flame retardant masterbatches and other flame retardant products (including melamine cyanurate flame retardants and diphenylethane intermediates). The company's main varieties of pesticides and flame retardants all have relatively complete intermediate self-supporting capabilities and outstanding competitiveness. The gross margin was better than the same period last year. Furthermore, the second quarter benefited from the depreciation of the RMB. The unit price of the company's pesticides and pesticide intermediates increased 15.5% year on year in the first quarter of 2018, and the price of flame retardants and intermediates increased 16.5% year on year. In terms of sales, sales of flame retardants and flame retardant intermediates increased slightly, and sales of pesticides and pesticide intermediates declined slightly. The company's gross margin increased significantly. The consolidated gross margin reached 42.5% in the first quarter, which was the peak of gross margin in all financial quarters disclosed by the company. There was a decline in the second quarter, falling to 41.0%. Overall, the company's gross margin was better than the same period last year. Furthermore, benefiting from the depreciation of the RMB exchange rate, the company's financial expense ratio for the second quarter was -3.4%, which raised the net profit margin level. The fund-raising project is about to be put into operation, bringing new momentum for growth. Several IPO fund-raising projects are gradually being completed. Among them, the production capacity of 1,000 tons of pyrimidine was put into operation in June 2018, 1,500 tons of melamine polyphosphate and 10,000 tons of compound masterbatch were put into operation at the end of 2018, and the construction of the 9,000 ton pesticide formulation product technical improvement project is expected to be completed in December 2019. Profit forecasting and ratings. EPS is expected to be 1.92 yuan, 2.50 yuan, and 2.90 yuan respectively in 2018-2020, and net profit returned to mother will maintain a compound growth rate of 25% over the next three years. Maintain a “buy” rating. Risk warning: safety and environmental risk, risk of price changes of major products, risk of changes in raw material prices, risk of capital raising investment projects, risk of exchange rate changes.