Investment highlights: The company released its 2018 semi-annual report, which is in line with expectations. In the first half of 2018, operating income was 13.770 billion yuan, up 10.38% year on year, net profit was 838 million yuan, up 5.44% year on year, and EPS was 0.27 yuan, which is basically in line with expectations. Among them, the 2Q18 quarter achieved operating income of 6.896 billion yuan (YoY +2.00%, QoQ +0.32%), and net profit of 308 million yuan (YoY -18.73%, QoQ -41.89%). The year-on-year increase in net profit of 1H18 was mainly due to a slight year-on-year increase in compound fertilizer sales and prices. The month-on-year decline in net profit for the single quarter was mainly due to a decline in the gross margin of compound fertilizer products due to rising raw materials, and vigorous promotion of a series of pro-soil products. The increase in marketing expenses led to a year-on-year increase in sales expenses. The company also announced that net profit from January to September 2018 increased by 0-30% year-on-year to between 908-1.18 billion yuan, mainly due to the rapid growth in customer business and increased sales volume driven by the “Jinfeng Commune” model. The increase in the price of raw single-ingredient fertilizer led to a slight year-on-year decline in the gross margin of the company's compound fertilizer products, and a year-on-year increase in product sales. The sharp rise in the volume and price of compound fertilizer products led to a year-on-year increase in revenue. The revenue of 1H18 ordinary compound fertilizer, slow-release compound fertilizer, and nitro compound fertilizer increased by 31.84%, 15.32%, and 4.13%, respectively. According to statistics from Longzhong Petrochemical, the average price of 45% chlorine-based compound fertilizer 1H2018 rose 7.0% year on year, but the average prices of raw materials urea, monoammonium phosphate, and potash fertilizer 1H2018 rose 21%, 21%, and 6% year on year, respectively. As a result, the gross margins of the company's ordinary compound fertilizer, slow-release compound fertilizer, and nitro compound fertilizer fell 0.21, 3.23, and 2.02 percentage points year on year to 18.17%, 9.86%, and 19.04%, respectively. The promotion of the “Jinfeng Commune” model slightly exceeded expectations, driving rapid growth in customer business. It is expected that compound fertilizer sales will maintain steady year-on-year growth in the third quarter. Jinfeng Commune integrates upstream, middle and downstream resources to provide farmers with a full range of planting services, including soil restoration, full crop nutrition solutions, brand building, production and marketing, and agricultural finance, etc., to create a new planting business model, enter the trillion-dollar agricultural service blue ocean market, and drive the increase in sales of compound fertilizer products through extension to back-end agricultural services. At present, nearly 100 county-level Jinfeng communes have been set up, and progress has slightly exceeded expectations. The goals of 150 in '18 and 300 in '19 should be easily achieved. The company uses specialized agricultural services and market construction in key regions as the main means. Through the promotion of new package fertilizer products, the sales volume of ordinary compound fertilizer and controlled release fertilizer compound fertilizer continues to grow. At the same time, we are vigorously developing soil improvement business, actively promoting a series of pro-soil cultivation products and implementing pro-soil cultivation solutions. Profit forecasts and investment ratings: The rise in basic energy prices will drive up food prices, and the upward shift in the price center of raw materials for single fertilizer will drive up the price of compound fertilizer and replacement demand. The progress of “Jinfeng Commune” has exceeded expectations, driving an increase in the company's product sales volume, and will also change the business model of the entire planting industry to “manufacturing+service”, which is in line with the current transformation requirements of building modern agriculture, rural revitalization, and supply-side reforms. Maintaining the profit forecast, we expect the company's net profit for 2018-2020 to be 10.01, 13.01, and 1,700 billion yuan respectively, corresponding to EPS of 0.32, 0.41, and 0.54 yuan/share, respectively. The current market value corresponding to PE is 21, 16, and 12 times, maintaining an increase in holdings rating.