1. With dominating urea products, the company presents more advantages in the weak market.
2. The company purchases “dual-chemical project”, which will achieve great-leap-forward growth in capacity.
3. The company is prominently advantageous in gas resources for its direct connection with gap pipes of east Sichuan.
4. Cost edges are presented due to favorable human resources and geographical position.
5. We forecast the company’s 2009-2010E EPS to be Rmb0.81 and Rmb1.41, and dynamic P/E ratio pegs at 16x and 9x respectively. With obvious cost edges and explicit future growth, we hereby maintain “Overweight” rating for the counter.
6. Potential risks: 1) price hikes of raw materials like natural gas and electricity; 2) Euro liabilities refund due to foreign currency purchase as well as the exchange rate fluctuation may adversely affect the company.