Investment Rating - The report assigns a "Buy" rating for the company with a target price of 6.5 HKD, indicating an 83% upside potential from the current price of 3.6 HKD [3][2]. Core Insights - The company achieved a 26% year-on-year growth in net profit for the first half of 2024, exceeding expectations, despite a decline in fertilizer and fine chemical product prices [2][1]. - The strong cost advantage of the company allows it to maintain high profitability even during a downturn in urea prices [2][1]. - The increase in sales volume of efficient fertilizers contributes to an improvement in profit margins [2]. Financial Performance Summary - Revenue for the first half of 2024 reached 12.06 billion RMB, remaining flat year-on-year, while net profit attributable to shareholders was 690 million RMB, up 26% [2]. - Urea revenue was 3.83 billion RMB, a 9% increase year-on-year, with a 13% price decline but a 25% increase in sales volume, leading to a 2 percentage point increase in gross margin to 31% [2]. - Compound fertilizer revenue was 3.41 billion RMB, a 6% increase year-on-year, with a 6% price decline and a 13% increase in sales volume, resulting in a 6 percentage point increase in gross margin to 18% [2]. - The chemical business continues to expand, with methanol revenue increasing by 32% year-on-year to 1.29 billion RMB, and DMF revenue growing by 14% to 600 million RMB [2]. Future Outlook - The company is expected to experience a peak in capital expenditures from 2024 to 2026, with several new projects set to commence production, including a compound fertilizer project in Huludao and a 60,000-ton polyformaldehyde project in Xinjiang [2]. - To alleviate financial pressure and focus on its core business, the company has sold its 100% stake in Xinjiang Tianxin Coal Mine for 1.37 billion RMB, providing a one-time income boost [2].

Investment Rating - The report maintains an "Outperform" rating for China XLX Fertiliser [2][8]. Core Insights - In the first half of 2024, the company achieved a net profit attributable to shareholders of RMB 687 million, representing a year-on-year increase of 25.78%. The total operating revenue was RMB 12.178 billion, up 0.26% year-on-year [5][6]. - The growth in net profit was primarily driven by a rebound in the chemicals market and improved performance of wholly-owned subsidiaries. The company has optimized production processes and controlled energy consumption, leading to a gross margin of 19.53%, an increase of 2.03 percentage points year-on-year [5][6]. - The company sold its 100% equity interest in Tianxin Coal Mine for RMB 1.374 billion, which will no longer hold equity interests in the coal industry post-transfer [7][8]. Financial Summary - The company’s sales revenue by product in the first half of 2024 includes: 1. Finished urea: RMB 3.834 billion, up 9% YoY, with a gross margin of 31% [6]. 2. Automotive urea solution: RMB 166 million, down 26% YoY, with a gross margin of 18% [6]. 3. Compound fertilizer: RMB 3.410 billion, up 6% YoY, with a gross margin of 18% [6]. 4. Methanol: RMB 1.291 billion, up 32% YoY, with a gross margin of 8% [6]. 5. Melamine: RMB 397 million, down 4% YoY, with a gross margin of 30% [6]. 6. DMF: RMB 595 million, up 14% YoY, with a gross margin of 13% [6]. - The company’s earnings per share (EPS) forecast for 2024-2026 is RMB 1.18, 1.28, and 1.42 respectively, with a target price of HKD 5.16 based on a PE ratio of 4.02 [8]

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 12,060,957 thousand, a slight increase from RMB 12,059,121 thousand in the same period last year[2] - Gross profit for the period was RMB 2,355,720 thousand, up from RMB 2,110,699 thousand, representing a growth of approximately 11.6%[2] - Profit before tax increased to RMB 1,122,610 thousand, compared to RMB 925,758 thousand in the previous year, reflecting a growth of about 21.3%[2] - Net profit for the period was RMB 938,486 thousand, an increase of 20.6% from RMB 777,559 thousand year-on-year[2] - Basic earnings per share rose to RMB 56.4, compared to RMB 44.8 in the same period last year, marking a growth of 26.8%[2] Assets and Liabilities - Total assets as of June 30, 2024, amounted to RMB 31,283,035 thousand, up from RMB 29,133,496 thousand at the end of 2023[3] - Current liabilities increased to RMB 11,475,772 thousand from RMB 10,443,581 thousand, indicating a rise of approximately 9.9%[4] - Total liabilities reached RMB 19,606,781 thousand, compared to RMB 18,622,498 thousand in the previous year, reflecting an increase of about 5.3%[5] - Net assets grew to RMB 11,676,254 thousand from RMB 10,510,998 thousand, representing an increase of approximately 11.1%[6] - Cash and cash equivalents increased significantly to RMB 2,014,075 thousand from RMB 1,162,558 thousand, showing a growth of about 73.5%[3] Revenue Breakdown - Urea sales revenue increased by approximately RMB 316 million or 9% to about RMB 3,834 million, driven by a 25% increase in sales volume despite a 13% decrease in average selling price[38] - The segment profit for urea was RMB 1,181,231,000, representing a significant increase from RMB 1,022,566,000 in the previous year[16][17] - Methanol sales revenue increased by approximately RMB 314,000,000 or 32% from RMB 977,000,000 in the first half of 2023 to RMB 1,291,000,000 in the first half of 2024, driven by a 1% increase in average selling price and a 31% increase in sales volume[41] - The segment profit for methanol was RMB 102,136,000, showing improvement from a loss of RMB 16,215,000 in the previous year[16][17] - Compound fertilizer sales revenue rose by approximately RMB 202 million or 6% to about RMB 3,410 million, with a 13% increase in sales volume[40] Expenses and Costs - The cost of sales for inventory was RMB 9,705,237,000 for the six months ended June 30, 2024, down from RMB 9,948,422,000 in 2023[19] - The company incurred financial costs of RMB 265,997,000 in 2024, a decrease from RMB 324,016,000 in 2023[18] - General and administrative expenses increased by approximately RMB 62,000,000 or 9.7% from RMB 640,000,000 in the first half of 2023 to RMB 702,000,000 in the first half of 2024, driven by higher personnel costs and increased operational expenses[47] Dividends and Shareholder Returns - The company declared a final dividend of RMB (292,503,000) for the year 2023, consistent with its commitment to return value to shareholders[8] - The proposed final dividend for the year ended December 31, 2023, is RMB 292,503,000, down from RMB 307,030,000 for the year ended December 31, 2022[22] - The company did not declare any interim dividend for the six months ended June 30, 2024, consistent with the same period in 2023[22] Strategic Initiatives - The company plans to expand its market presence and enhance its product offerings through ongoing research and development initiatives[10] - The company is focused on strategic acquisitions to enhance its operational capabilities and market reach[10] - The company continues to optimize production processes and control energy consumption, achieving a 12% year-on-year increase in overall gross profit[37] Market Outlook - The outlook for the second half of the year indicates a recovery in the domestic economy and a balanced supply-demand situation in the fertilizer industry, with expectations for improved performance in compound fertilizers[51] Employee and Operational Metrics - The number of employees increased to 10,781 as of June 30, 2024, up from 10,390 as of December 31, 2023[63] - The company made payments of approximately RMB 1,894,882,000 for the purchase of property, plant, and equipment during the period, compared to RMB 1,737,713,000 for the same period in 2023[32]

Investment Rating - The report initiates a "Buy" rating for China XLX Fertiliser with a target price of HK$5.70, corresponding to price-to-earnings ratios of 5.2x, 4.9x, and 4.3x for the years 2024, 2025, and 2026 respectively [1][2]. Core Viewpoints - The competition in the high-end compound fertilizer market is less intense than expected [1][2]. - The growth potential of overseas markets has been underestimated [1][2]. - The Chinese fertilizer market is transitioning towards high-quality compound fertilizers due to environmental regulations and rising production costs in the coal-based industry [1][2]. - Despite a decrease in total fertilizer application in 2022, the application of compound fertilizers increased by 8.9% [1][2]. - China XLX Fertiliser is uniquely positioned to capitalize on this transition, aiming to expand market share and achieve higher revenue and net profit growth than its peers [1][2]. Summary by Sections Company Overview - China XLX Fertiliser, established in 1969 and listed in Hong Kong in 2009, is a leading coal chemical group specializing in urea and compound fertilizers, with major production bases in Henan, Xinjiang, and Jiangxi [7][8]. - The company’s main products include urea, compound fertilizers, methanol, and other chemical products, with urea and compound fertilizers contributing 29.3% and 26.1% to total revenue in 2023, respectively [9][10]. Market Insights - The high-end compound fertilizer market is experiencing growth, with a 2022 increase in application volume despite an overall decrease in fertilizer use [23]. - The overseas market has shown significant revenue growth, with overseas sales increasing from RMB 148 million in 2019 to RMB 826 million in 2023, reflecting a 4.6-fold increase [24]. Investment Logic - The demand for high-quality compound fertilizers in China is expected to continue increasing, driven by government policies and changing agricultural practices [25]. - The company has a dual advantage of technology and cost efficiency, supported by significant R&D investments and a nationwide sales network [25][26]. Growth Catalysts - The company plans to expand its production capacity significantly from 2024 to 2026, including new facilities in Henan, Guangxi, and Xinjiang, which will drive growth [28].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 6.5, indicating an 83% upside potential from the current price of HKD 3.6 [4][2]. Core Insights - The company's net profit attributable to shareholders decreased by 15% year-on-year in Q1 2024, aligning with expectations. Revenue for the same period reached HKD 57.5 billion, down 8% year-on-year [2][4]. - The relaxation of urea export policies is expected to alleviate domestic supply pressure and support price increases, positively impacting market sentiment [2][4]. - The company is focusing on optimizing its sales structure and promoting high-efficiency fertilizers to counteract the negative effects of price declines, ensuring a stable gross margin [2][4]. Financial Performance Summary - In Q1 2024, urea revenue was HKD 19.9 billion, a 2% increase year-on-year, despite a 19% drop in prices. The gross margin for urea remained stable at 30% [2]. - Compound fertilizer revenue was HKD 14.3 billion, down 8% year-on-year, with a gross margin of 14.7%, up 3 percentage points [2]. - The company reported a 8% year-on-year increase in melamine revenue, reaching HKD 2.1 billion, with a gross margin of 43%, up 5 percentage points [2]. - DMF revenue grew by 12% year-on-year to HKD 2.9 billion, with a gross margin of 12%, also up 5 percentage points [2]. Production Capacity Expansion - The company is expanding its production capacity with new projects, including a 700,000-ton urea project in Xinxiang and a second-phase DMF project in Jiangxi, which are expected to enhance production capabilities and reduce costs [2][4]. - Additional projects scheduled for 2024 include a 60,000-ton polyoxymethylene project in Xinjiang and a 300,000-ton compound fertilizer project in Guangxi [2][4].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其 準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容 而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 CHINA XLX FERTILISER LTD. * 1866 截至二零二四年三月三十一日止三個月未經審核業務更新公告 中國心連心化肥有限公司（「本公司」）之董事會（「董事會」）謹此宣佈，本公司及其附屬公 司（「本集團」）截至二零二四年三月三十一日止三個月（「二零二四年第一季度」）的未經審 核業務更新。 二零二四年第一季度，供應格局寬鬆、原料煤碳價格走弱、出口受政策影響不及預期， 煤化工相關產品價格隨之降低。受此因素影響，本集團二零二四年第一季度的未經審核 綜合收入由截至二零二三年三月三十一日止三個月（「二零二三年第一季度」）的約人民幣 62.79億元减少約人民幣5.29億元或8%至約人民幣57.5億元。盡管產品價格下滑影響整體 毛利有所减少，但本集團通過強化產品創新及技術研發，加大對高效肥及差異化產品的 推廣，確保毛利率水平穩中上升，其中主導產品尿素毛利率保持平穩，複合肥及化工品 毛利率呈上升趨勢， ...

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 5.24, representing a potential upside of 44.68% from the current price of HKD 3.62 [2][3]. Core Insights - The company's revenue for the year 2023 reached RMB 23.475 billion, a year-on-year increase of 1.75%, while the net profit attributable to shareholders decreased by 10.51% to RMB 1.187 billion due to soft supply-demand dynamics and lower prices for urea and other chemical products [1][4]. - The report anticipates a recovery in chemical product prices in 2024, driven by a projected increase in demand and the company's ongoing capacity expansion projects [1][2]. Financial Performance Summary - **Revenue**: RMB 23.475 billion in 2023, up 1.75% from 2022, with forecasts of RMB 23.999 billion in 2024 and RMB 26.427 billion in 2025 [4][5]. - **Net Profit**: RMB 1.187 billion in 2023, down 10.51% from 2022, with projections of RMB 1.484 billion in 2024 and RMB 1.650 billion in 2025 [4][5]. - **Earnings Per Share (EPS)**: RMB 0.969 in 2023, with expected increases to RMB 1.21 in 2024 and RMB 1.35 in 2025 [4][5]. - **Gross Margin**: 17.83% in 2023, slightly down from 18.84% in 2022, with expectations of improvement in future years [1][4]. Business Segment Performance - **Urea Segment**: Revenue increased by 1% to RMB 6.874 billion in 2023, with a 9% rise in sales volume but a 7% decline in average selling price [1]. - **Compound Fertilizer**: Revenue grew by 0.2% to RMB 6.130 billion, with a 16% increase in sales volume offset by a 13% drop in average selling price [1]. - **Methanol**: Revenue rose by 2% to RMB 2.339 billion, driven by a 9% increase in sales volume, although the gross margin was negative at -0.6% [1]. - **Melamine**: Revenue decreased by 19% to RMB 0.784 billion, with a significant drop in gross margin from 49% to 29% [1]. Capacity Expansion Projects - The company is progressing with new capacity projects, including a 500,000-ton nitro fertilizer plant in Henan and a 300,000-ton compound fertilizer plant in Guangxi, both expected to commence operations in 2024 [1][2]. - Additional projects include a 60,000-ton polyoxymethylene project in Xinjiang and an 800,000-ton synthetic ammonia and 1,150,000-ton urea project in Jiangxi, slated for completion by 2025 [1].

Stock Code 股份代號：1866 High-Ef f iciency Fertilisers in China 中國高效肥 ANNUAL REPORT 2023 年報 Design and Production: i.Link Group Limited Stock Code 股份代號：1866 This annual report is printed on FSCTM chlorine-free and acid-free. The FSC TM in accordance with the rules of the Forest Stewardship Council®. ANNUAL REPORT 2023 年報 China XLX Culture 中國心連心文化 We adhere to the culture of integrity and the corporate spirit of "working hard to fulfil the needs of our customers" and we are committed to creating the greatest val ...

Investment Rating - The report assigns a neutral investment rating to China Heart and Heart Fertilizer (01866) based on its stable revenue growth and ongoing project developments [1][2]. Core Insights - In 2023, the company achieved a revenue of 23.475 billion yuan, representing a year-on-year growth of 1.75%, while the net profit attributable to shareholders decreased by 10.51% to 1.187 billion yuan [1][2]. - The company successfully launched new production capacities, including a 700,000-ton urea project and a second-phase DMF project, contributing to stable revenue growth despite challenges in the global economy and fluctuating fertilizer prices [2][3]. - The report highlights the company's strategic focus on dual-strength development in fertilizer and chemical products, leveraging resources from various regions to enhance product competitiveness and market share [3]. Summary by Sections Financial Performance - In Q4 2023, the company reported a revenue of 5.955 billion yuan, with a year-on-year increase of 7.19% and a quarter-on-quarter increase of 9.05%. The net profit for the same period was 358 million yuan, showing a significant year-on-year increase of 93.23% [1][2]. - The sales gross margin was 17.84%, down by 1.01 percentage points, while the net profit margin was 6.94%, down by 0.87 percentage points [1]. Business Segments - Urea segment revenue reached 6.874 billion yuan, up 0.65% year-on-year, with a gross profit of 2.007 billion yuan, reflecting a 5.09% increase [2]. - The DMF segment saw remarkable growth, with revenue soaring by 481.51% to 1.047 billion yuan and gross profit increasing by 71509% to 116 million yuan [2]. Strategic Development - The company is advancing multiple projects, including a 60,000-ton polyoxymethylene project in Xinjiang and a compound fertilizer project in Guangxi, expected to be operational by Q4 2024 [3]. - The report emphasizes the importance of modern agricultural practices and the demand for efficient fertilizers, which the company aims to meet through enhanced product development and marketing strategies [3].

Table_BaseInfo Table_Title 公司动态分析 2024 年 03 月 11 日 中国心连心化肥（1866.HK） 证券研究报告 化肥行业 年业绩符合预期，化肥业务坚如磐石 23 投资评级： 买入 2023年中国心连心化肥归母净利润11.9亿，同比下降11%，符合预期。净利润下降主 要因为化工产品价格下降，利润率低，拖累整体业绩表现，化肥业务是业绩的主驱动力， 目标价格： 6.5 港元 在化肥产品价格下跌的大背景下，仍有稳定的利润率和较高的利润贡献。我们看好未来 心连心高效肥的发展，不断优化销量结构，提升价格与利润率。预计2024-2026公司归 现价 (2024-03-08)： 3.4港元 母净利润为13.0亿、17.1亿和22.6亿，同比增长10%、31%和32%。维持目标价6.5 港元，对应24年5.5倍预测市盈率，距离现价有91%上涨空间，买入评级。 总市值(百万港元) 4,180.36 流通市值(百万港元) 4,180.36 报告摘要 总股本(百万股) 1,218.76 流通股本(百万股) 1,218.76 23年归母净利润下降11%，符合预期。2023年中国心连心化肥的收入达到 ...