Investment Rating - The report maintains a Buy rating for Sinochem Fertilizer (297 HK) with a target price of HKD 1 4, representing a 49% upside from the current price of HKD 0 94 [1][4] Core Views - Sinochem Fertilizer's H1 2024 net profit attributable to shareholders grew by 4 7% YoY to RMB 1 05 billion, exceeding expectations [1][2] - The company's revenue in H1 2024 reached RMB 13 68 billion, up 4 2% YoY, driven by improved product mix and operational efficiency [2] - The Bio+ strategy is showing significant results, with differentiated product sales reaching 1 32 million tons, up 14 6% YoY [2] - The report raises the company's net profit forecasts for 2024-2026 to RMB 1 09/1 18/1 28 billion, representing a 74%/8%/8% YoY growth respectively [1][2] Financial Performance Revenue and Profit - H1 2024 revenue: RMB 13 68 billion, up 4 2% YoY [2] - H1 2024 net profit attributable to shareholders: RMB 1 05 billion, up 4 7% YoY [2] - 2024E-2026E revenue growth: 6%/5%/6% [3][9] - 2024E-2026E net profit growth: 74%/8%/8% [3][9] Product Sales - Total fertilizer sales in H1 2024: 4 66 million tons, up 17% YoY [2] - Compound fertilizer revenue: RMB 4 69 billion, up 4% YoY [2] - Phosphate fertilizer revenue: RMB 4 18 billion, up 20% YoY [2] - Potassium fertilizer revenue: RMB 2 51 billion, down 13% YoY [2] - Special fertilizer revenue: RMB 440 million, up 23% YoY [2] Profitability - 2024E-2026E gross margin: 11%/11%/11% [3][9] - 2024E-2026E net margin: 5%/5%/5% [3][9] - 2024E-2026E ROE: 5%/6%/6% [9] Strategic Initiatives - The Bio+ strategy is driving growth, with differentiated product sales reaching 1 32 million tons, up 14 6% YoY [2] - Key new products such as Huanfeng, Weidefeng, and Shuifeng have been launched, gaining market recognition for their quality and functionality [2] - The company plans to increase R&D investment in Bio+ fertilizers and develop large-scale biological products to further boost performance [2] Valuation and Market Performance - Target price: HKD 1 4, based on 8 3x 2024E P/E [1][4] - Current price (as of 2024-08-26): HKD 0 94 [4] - Market cap: HKD 6 6 billion [5] - 12-month price range: HKD 0 7-1 1 [5] Financial Forecasts Income Statement - 2024E-2026E revenue: RMB 23 06/24 31/25 71 billion [8] - 2024E-2026E net profit: RMB 1 09/1 18/1 28 billion [8] Balance Sheet - 2024E-2026E total assets: RMB 20 51/21 23/22 07 billion [10] - 2024E-2026E equity: RMB 10 74/11 42/12 16 billion [10] Cash Flow - 2024E-2026E operating cash flow: RMB 1 48/1 71/1 81 billion [11] - 2024E-2026E net cash change: RMB 550/444/159 million [11]
中化化肥：业绩超预期，生物+战略推进显成效