The company's recent situation, Sylt announced that it received a production safety license issued by the Emergency Management Department on June 17 and a mining license issued by the Department of Natural Resources on June 27. At this point, the company has obtained the necessary external permits and internal conditions for pyrite mining business. The company's Maweishan pyrite mining technology improvement project of 380,000 tons/year has entered the production stage where it can be officially put into production. Comment that the commissioning of the pyrite project will further improve the industrial chain and enhance profitability. After the company's 380,000 tons/year pyrite mining project in Maweishan, Xuanzhou District, Xuancheng City, is put into operation, the external procurement volume of pyrite will be reduced, which will help further guarantee the supply of raw materials for the company's three pyrite sulfuric acid production lines. We expect to effectively reduce production costs and enhance the profitability of the company's monoammonium phosphate. At the same time, the associated mining of zinc, lead, copper, and silver will also gradually increase the company's profitability. The decline in raw material prices compounded by poor demand, and the price of monoammonium phosphate declined. In 2018, phosphate ore prices rose sharply. Downstream enterprises were concerned about later phosphate ore supply. At the end of the year, there were many early preparations. At the same time, after rectification, production resumed in 2019. Phosphate ore production increased in the first half of 2019, which led to a decline in phosphate ore prices. Since the beginning of the year, phosphate ore market prices in central and eastern China have fallen by 16.9%/8.5% to 490/540 yuan/ton, respectively. Combined with weak demand on the demand side of phosphorus fertilizer due to low agricultural product prices, the cumulative price of ammonium phosphate has dropped 11.2150 to 11.2150/ tons. Weak demand has led to a decline in compound fertilizer prices, and fundraising for new compound fertilizer and soil conditioner projects. Affected by the adjustment of crop planting structure and low crop prices, demand for compound fertilizer continued to be weak this year. Since the beginning of the year, the factory price of the company's sulfur-based compound fertilizer has fallen by 3.6% to 2,450 yuan/ton. The company issued convertible bonds to raise 800 million yuan to build 650,000 tons of new fertilizer and 400,000 tons of soil conditioner projects. We expect it will help the company expand the variety of new fertilizers and increase the production capacity of new fertilizers, help the company enhance its competitiveness and increase its profitability. Valuation recommendations Due to falling prices of phosphate fertilizer and compound fertilizer, we lowered our 2019 profit forecast by 6% to 0.50 yuan/share, maintaining the 2020 profit forecast of 0.58 yuan/share. Currently, the company's stock price corresponds to a price-earnings ratio of 10.3/8.9x in 2019/20. Maintaining a target price of 6.4 yuan, there is room for 25% increase compared to the current stock price. The target price corresponds to 13/11x PE in 2019/20, maintaining an outperforming industry rating. Risky prices of phosphate fertilizer and compound fertilizer are lower than expected, and there is a risk of a change in controlling interest.