According to the statistics of 20 listed chemical fertilizer companies in China Agricultural Resources, in the first half of 2019, 16 companies made profits, accounting for 80%. Among them, 10 companies with declining net profits, 6 companies with increasing net profits and 4 companies with loss, accounting for 20%. Since 2017, the domestic urea market has opened a new cycle of prosperity. Although the price of urea in 2019 is lower than that in 2018, it is still at a high level in recent years, which is a good year for the overall operation in the past ten years. The price of phosphate fertilizer products decreased compared with the end of 2018, and the export volume of phosphate compound fertilizer increased, but the export price declined more. The lower cost of upstream raw materials partly hedged the adverse impact of product price fluctuation, and the overall profit level of the industry slightly declined. * ST Salt Lake potassium chloride prices continued to rise, gross interest rate as high as 74.64%. With the recovery of basic fertilizer industry, the profit margin of compound fertilizer industry has been squeezed, and the profit has declined. Based on the above situation, most of the chemical fertilizer listed companies have maintained profits this year and handed in better answers. However, we must also see that many enterprises have encountered difficulties in the process of diversified development, especially the decline in the profitability of the chemical sector hinders the growth of enterprise performance.

Nitrogenous fertilizer

_Profit of the industry and gross profit of multi-enterprise chemical industry sector declined

_During the reporting period, among the listed companies with nitrogen fertilizer business, except * ST Hehua, * ST Liuhua and St. Jitang, all the other companies achieved different levels of profits.

During the reporting period, the gross interest rates of new chemical materials business, basic chemical industry and fertilizer industry in Western Shandong decreased in varying degrees compared with the same period last year, with a decrease of 9.67%, 4.83% and 4.97% respectively. Sichuan Meifeng's gross urea interest rate was 22.38%, 13.46% lower than the same period last year. ST Yihua's declining performance is mainly due to a larger drop in sales price of caustic soda, the leading product, compared with 2018.

During the reporting period, Huachang Chemical realized a net profit of 195.895 million yuan belonging to shareholders of listed companies, an increase of 147.07% compared with the same period last year. One of the main drivers of its performance growth is the increase in gross profit, including the rise in the price of ammonium chloride.

_Generally speaking, most nitrogenous fertilizer enterprises still continue the profit model of 2018, but because these enterprises include chemical and fertilizer business, gross interest rate of some enterprises'nitrogenous fertilizer plate has slightly declined, which has a certain impact on enterprise performance. Overall, urea and ammonium chloride products still have a good profit level. Relatively speaking, the long-term shutdown of enterprises and the decline of profitability of chemical industry and other sectors are the main reasons for the decline of enterprise performance.

phosphate fertilizer

_Profit slightly declined, and enterprise performance was affected by multiple factors.

During the reporting period, three companies with phosphate fertilizer business in six countries, chemical industry, Yuntianhua and Xingfa, Hubei, all achieved profits. Six of them achieved net profit of 44.45 million yuan in the first half of the year, an increase of 151.49% over the previous year. The performance of chemical industry in the six countries has increased considerably, but it needs to be carefully evaluated. During the reporting period, the company's net profit attributable to shareholders of listed companies, excluding recurrent gains and losses, was 14.2145 million yuan. That is to say, after deducting recurring gains and losses, the company's main business still lost in the first half of the year.

Overall, in the first half of the year, the output and consumption of phosphate fertilizer market declined slightly compared with the same period of last year, and the overall profit level of the industry declined slightly, which has a certain impact on enterprise performance. The performance of enterprises is determined by multiple factors, because the business of listed phosphate fertilizer enterprises is also diversifying. The Cumulative Performance of each sector ultimately determines the performance of enterprises, and the performance of some companies is also affected by non-recurrent profit and loss items such as government subsidies.

Potash fertilizer

STSalt Lake faces the risk of suspension of listing.

During the reporting period, Qinghai Salt Lake realized 9.931 billion yuan of business income, an increase of 26.72% over the previous year, and realized net profit of 424 million yuan belonging to shareholders of listed companies, a decrease of 755 million yuan over the same period of last year. The main reason for the decrease of loss is that the sales volume of potash fertilizer increased by 38,000 tons, the average selling price increased by 181 yuan/ton and chlorination increased by 181 yuan/ton over the same period of last year. The gross profit rate of potassium business is as high as 74.64%. During the reporting period, magnesium industry lost 1.78 billion yuan, chemical industry had an average production load of 66% in the first half of the first and second phases, and had the ability to meet the production standards in full under the conditions of guaranteeing natural gas, with a loss of 326 million yuan in the first half of the year. Lanke lithium industry's profit in the first half of the year fell 61.28% compared with the same period last year. Due to the drag of these plates, Qinghai Salt Lake still suffered a large loss in the first half of the year.

According to the semi-annual report of Qinghai Salt Lake, the company faces the risk of suspension of listing and termination of listing. According to the Stock Listing Rules of Shenzhen Stock Exchange, if the audited net profit is negative for three consecutive fiscal years, the company will face a suspension of listing. The company will suffer losses in 2017 and 2018. If the company continues to suffer losses in 2019, the company will face the risk of suspension of listing. In addition, on August 15, 2019, the creditors of the company submitted a restructuring application to the court. However, whether the application can be accepted by the court and whether the company has entered the restructuring procedure are still uncertain. If the court formally accepts the application for reorganization of the company, the company will cooperate with the court and the administrator to carry out the relevant reorganization work, and fulfill the legal obligations of the debtor according to law, and actively do a good job in daily operation and management. If the reorganization fails, the company will be declared bankrupt. If the company is declared bankrupt, according to the provisions of Article 14.4.1 (23) of the Shenzhen Stock Exchange Stock Listing Rules, the company's shares will face the risk of termination of listing.

_Based on the major risks faced, the key work in the second half of Qinghai Salt Lake will accelerate the divestiture and sale of non-main assets of Salt Lake, optimize the ownership structure, and realize the light loading of listed companies.

_-_compound fertilizer

_Cost rises and profit margins are compressed

In the first half of 2019, the production cost of compound fertilizer enterprises increased due to the rising price of raw materials. The main raw materials for compound fertilizer are nitrogen fertilizer, phosphorus fertilizer and potassium fertilizer. The cost of raw materials accounts for 80% - 85% of the cost of compound fertilizer production. Since 2016, under the influence of supply-side reform, the prices of nitrogen, phosphorus and potassium fertilizers have been rising steadily, ranging from 20% to 100%, which has led to the reduction of profit margin in the compound fertilizer industry.

During the reporting period, Kim Jong-Da realized business income of 77,76,974,800 yuan, and net profit attributable to shareholders of listed companies was 42,923,430,000 yuan. Compared with the same period last year, business income decreased by 43.52%, and net profit attributable to shareholders of listed companies decreased by 48.76%. During the reporting period, Stanley achieved a total revenue of 312.129 million yuan, an increase of 6.68% over the previous year. Net profit attributable to shareholders of listed companies was 101.5161 million yuan, a decrease of 39.72% over the previous year. However, Xinyangfeng achieved negative growth, with net profit attributable to the shareholders of the parent company reaching 630 million yuan, an increase of 17.06% over the same period last year. In the first half of the year, the sales of conventional and new compound fertilizers increased, and the profitability of monoammonium phosphate continued to improve, thus making its performance grow.

_Although the performance of enterprises is different, it is certain that the major listed companies of compound fertilizer still have strong profitability, only because the rising price of basic fertilizer has reduced the profit margin of compound fertilizer enterprises.

In short, in the first half of the year, although the nitrogen and phosphorus fertilizer enterprises failed to maintain the trend of high performance growth in 2018, the nitrogen and phosphorus fertilizer industry still maintained a profit model. Potassium fertilizer industry has maintained a sustained growth, but due to the drag of other business sectors of enterprises themselves, Qinghai Salt Lake is facing major operational risks. The profitability of compound fertilizer enterprises is still strong. The profit margin of compound fertilizer enterprises is squeezed by the rising price of basic fertilizer of nitrogen, phosphorus and potassium.