Volume and price have risen sharply. The company released an interim report, achieving revenue of 350 million yuan, an increase of 38.81% over the previous year; realized net profit of 113 million yuan, an increase of 78.42% over the previous year, and earnings per share of 0.60 yuan. The company's performance grew strongly, in line with market expectations. The company's revenue and profit both increased, mainly due to the release of production capacity from fund-raising projects and the sharp rise in prices of BIT and o-chlorobenzonitrile products. As a result, the overall gross margin increased by 11.28PCT to 53.77%. All of the company's expense rates have increased, and the comprehensive cost rate has increased by 2.80PCT to 15.32%. By product, industrial fungicides achieved revenue of 340 million yuan, a year-on-year increase of 60.11%, and sales volume of 13,488.19 tons, an increase of 53.87% over the previous year; o-chlorobenzonitrile intermediates achieved revenue of 30 million yuan, an increase of 20.66% year-on-year, and sales volume of 579.01 tons, a year-on-year decline of 46.04%. On a quarterly basis, Q2 achieved revenue of 213 million yuan, a year-on-year increase of 68.56%, and net profit of 81 million yuan, a year-on-year increase of 125.37%. Q2 revenue and profit increased significantly. First, sales of industrial biocides surged 48.06% month-on-month to 8,050.64 tons, and the 12,000 tons of CIT/MIT production capacity Q2 were fully released; second, the prices of BIT and o-chlorobenzonitrile rose sharply from 76.47 yuan/kg and 31.04 yuan/kg in Q1 to 140.03 yuan/kg and 80.85 yuan/kg in Q2, respectively. There is still a shortage of o-chlorobenzonitrile. The second phase of production is expected to contribute more incremental performance. O-chlorobenzonitrile is an important organic synthesis intermediate. Downstream, including BIT, disperse dyes, and sartans, etc., the total domestic demand is expected to exceed 30,000 tons. The safety incident in Yancheng affected Lianhua Technology and Changhai, Jiangsu Province, with a total production capacity of 20,000 tons, accounting for about 2/3 of the domestic production capacity. The gap is obvious. The company currently has a production capacity of 10,000 tons of o-chlorobenzonitrile, of which the first phase of 3,000 tons was put into operation in September 2017, and the second phase of 7,000 tons was put into operation in July 2019. We expect that with the gradual release of the second phase of 7,000 tons of production capacity, it is expected that the company's performance in the third and fourth quarter will continue to increase month-on-month. The launch of fund-raising projects to ease the bottlenecks in industrial fungicide production capacity The company's industrial fungicides have been limited by production capacity bottlenecks until now. With the 12,000 tons of CIT/MIT or 2000 tons of MIT, 400 tons of OIT, and 2,500 tons of BIT series product projects officially put into operation in April 2019, the company's current problem of insufficient industrial biocide production capacity has been effectively alleviated, the scale effect has been further enhanced, and unit production costs have been reduced. For the first time, the company also has the ability to mass-produce BIT series products, making up for the company's shortcomings in the isothiazolinone industrial fungicide product series, enriching the company's product structure, and becoming an important driver for improving the company's business performance in the first half year of 2019 and even the whole year. We believe that with the release of production capacity for o-chlorobenzonitrile, an intermediate upstream of BIT, BIT's production load is also expected to increase further. Profit forecast and investment recommendations: With the release of production capacity for products such as CIT/MIT, o-chlorobenzonitrile, and BIT, the company's performance is expected to continue to improve month-on-month. We expect the company's net profit in 2019-2021 to be 3.99/4.53/385 million yuan, and the current price corresponding to 2019 PE is 14.6 times, maintaining the “buy” rating. Risk warning: Fund-raising projects are progressing less than expected, and there is a risk that product prices will decline.