The 2010 performance was lower than expected:

Jianfeng Chemical released its annual report for 2010. during the reporting period, the company achieved operating income of 2.078 billion yuan, down 4.27% from the same period last year, with a total profit of 152 million yuan and a net profit of 132 million yuan, down 21.71% from the same period last year. At the same time, the company announced the profit distribution plan for 2010, handing out 1.0 yuan (including tax) in cash for every 10 shares to all shareholders.

Front:

We expect urea prices to remain relatively high at 1900 yuan / ton for the whole year, on the one hand, due to the high cost of raw materials, and at the same time, spring ploughing and peak season exports will stimulate urea prices to strengthen.

The company's melamine plant has effectively reduced the production cost through co-production with urea.

Negative:

The gas supply of urea in the main part of the company is insufficient, and it has been stopped for 70 days throughout the year. We expect that due to the constraints of natural gas supply, there is still great uncertainty about the operating rate of the company's two large chemical fertilizer plants in the future.

Natural gas prices have an upward trend in the long run, which will bring obvious cost pressure to the company.

Development trend:

We believe that due to the limited supply of natural gas and the upward trend of gas prices, the future profitability of Qitou urea enterprises is facing greater uncertainty.

Profit forecasts and investment advice:

We estimate that the company's EPS for 2011-2012 is 0.30 yuan and 0.37 yuan, and the current share price is 26x and 22x for 2011-2012 PE, respectively, maintaining a "prudent recommendation" rating.

Risk:

1. The company's natural gas supply is tight and prices are likely to rise again.

two。 Weather factors led to a sharp decline in demand for urea, urea market continues to be depressed.