Core Viewpoint - China Heart Heart Fertilizer reported a mixed performance in Q1, with revenue growth but a significant decline in net profit, indicating challenges in the fertilizer market and the need for strategic adjustments [1][2][3] Financial Performance - The company achieved revenue of approximately 5.846 billion yuan, a year-on-year increase of 1.7% and a quarter-on-quarter increase of 2.4% [1] - The net profit attributable to shareholders was about 198 million yuan, a decrease of 30.03% year-on-year, although it marked a recovery from a loss of approximately 74.64 million yuan in the previous quarter [1] Market Dynamics - The fertilizer market is experiencing a "first suppressed then rising" trend, with prices of coal chemical products remaining low in January and February, followed by a rebound in March due to spring farming demand and improved export expectations [1] - The overall gross margin increased by nearly 3 percentage points to 14% during the period, driven by rising prices of downstream products [1] Segment Performance - The fertilizer segment generated sales revenue of approximately 3.09 billion yuan, accounting for 53% of total revenue, making it the largest revenue source for the company [1] - The chemical segment achieved sales revenue of about 2.46 billion yuan, representing 42% of total revenue, while other segments contributed approximately 290 million yuan, or 5% [1] Product Development and Strategy - The company is enhancing the sales proportion of high-efficiency compound fertilizers, with a 6% increase in sales volume and a 9% increase in product prices, leading to a 2 percentage point rise in gross margin [2] - The gross margin for humic acid reached 25%, supported by ongoing research and development [2] Future Projects - Upcoming projects include a 600,000-ton synthetic ammonia and 1.2 million-ton slow-release fertilizer project in Jiangxi, expected to be operational by Q3 2025, and a 320,000-ton melamine and 500,000-ton high-efficiency compound fertilizer project in Xinjiang, projected for completion by the end of 2026 [2] Market Outlook - The company anticipates an increase in international potassium fertilizer and grain prices due to tariff policies, alongside a shift in domestic agriculture towards precision farming, which will enhance demand for high-efficiency fertilizers [3] - The company plans to leverage policy benefits for technological upgrades and focus on functional, customized products and differentiated services to strengthen its market position as a "proponent of efficient fertilizer use" [3]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 6.5 HKD, indicating a potential upside of 49% from the current price of 4.4 HKD [7]. Core Views - Short-term performance fluctuations do not alter the long-term value of the company, with projected net profits for 2025-2027 expected to be 1.0 billion, 1.76 billion, and 2.6 billion RMB, reflecting a year-on-year change of -32%, +76%, and +48% respectively [4][5]. - The decline in urea prices significantly impacted the company's performance, with a 30% year-on-year drop in net profit for Q1 2025, despite a slight increase in revenue [2][3]. Revenue and Profit Analysis - In Q1 2025, the company achieved revenue of 5.85 billion RMB, a year-on-year increase of 1.7%, while net profit was 200 million RMB, down 30% year-on-year [2][3]. - Urea revenue was 1.54 billion RMB with a sales volume of 965,000 tons, maintaining year-on-year sales but with a price drop of 23% to 1,592 RMB/ton [3]. - Compound fertilizer revenue reached 1.56 billion RMB with a sales volume of 600,000 tons, showing a 14% increase in sales volume but a 4% price decline [3]. - Methanol revenue was 800 million RMB, with a sales volume of 354,000 tons, reflecting a 22% increase in sales volume and a 4% price increase [3]. Market Demand and Export Policy - The report anticipates a total demand for urea in China of 69 million tons in 2025, with agricultural demand at 43 million tons (3% growth) and industrial demand at 22 million tons (5% growth) [4]. - The export policy for urea has shifted from comprehensive restrictions to a more structured control, allowing for a total export quota of 4.25 million tons in 2025, which is expected to alleviate domestic supply issues [4].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 6.5, indicating a potential upside of 49% from the current price of HKD 4.4 [7]. Core Views - Short-term performance fluctuations do not alter the long-term value of the company, with projected net profits for 2025-2027 expected to be RMB 1.0 billion, RMB 1.76 billion, and RMB 2.6 billion, respectively, reflecting a year-on-year change of -32%, +76%, and +48% [4][5]. Revenue and Profit Analysis - In Q1 2025, the company achieved revenue of RMB 5.85 billion, a year-on-year increase of 1.7%, while net profit was RMB 200 million, down 30% year-on-year [2][4]. - Urea revenue was RMB 1.54 billion with a sales volume of 965,000 tons, maintaining year-on-year levels, but the price decreased by 23% to RMB 1,592 per ton, leading to a gross margin drop of 13 percentage points to 18% [3]. - Compound fertilizer revenue reached RMB 1.56 billion with a sales volume of 600,000 tons, a 14% increase year-on-year, while the price fell by 4% to RMB 2,599 per ton, maintaining a gross margin of 14% [3]. - Methanol revenue was RMB 800 million with a sales volume of 354,000 tons, a 22% increase year-on-year, and a price increase of 4% to RMB 2,270 per ton, resulting in a gross margin rise of 4 percentage points to 10% [3]. - The company expects a total demand for urea in China to be 69 million tons in 2025, with agricultural demand at 43 million tons and industrial demand at 22 million tons, reflecting growth rates of 3% and 5%, respectively [4]. Market Dynamics - The report highlights that changes in export policies from comprehensive restrictions to structured adjustments will significantly impact demand, with an expected export volume of 4 million tons in 2025, a staggering increase of 1,438% [4]. - The report emphasizes that the relaxation of export policies will help alleviate domestic urea supply surplus issues [4].

Core Viewpoint - The fertilizer market is experiencing a recovery in prices and demand, influenced by agricultural product prices, particularly in the context of the 2025 outlook for corn and soybeans [1][6]. Group 1: Fertilizer Market Dynamics - Fertilizer prices are closely linked to agricultural product prices, with a notable increase in prices for corn, soybean meal, wheat, and cottonseed meal in Q1 2024 [1]. - The overall fertilizer market showed a "first suppressed, then rising" trend during Q1 2024, with urea prices rebounding due to spring planting demand and enhanced export expectations [1][6]. - The leading fertilizer producer, China Heart-to-Heart Fertilizer, reported a 26% increase in gross profit quarter-on-quarter in Q1 2025, driven by improved supply-demand dynamics [1][6]. Group 2: Financial Performance of China Heart-to-Heart Fertilizer - In Q1 2025, China Heart-to-Heart Fertilizer's total revenue was 5.846 billion RMB, a slight increase of 1.7% year-on-year, with a quarter-on-quarter increase of 2.4% [2][6]. - The company reported a gross profit of 834 million RMB, with a gross margin of 14%, showing a quarter-on-quarter recovery despite a year-on-year decline [6]. - The company's net profit attributable to shareholders decreased by 30% year-on-year but increased by 89% quarter-on-quarter, indicating a potential turning point [2][6]. Group 3: Product Performance and Market Position - Urea revenue increased by 6.3% to 7.306 billion RMB in 2024, but the gross margin fell by 4 percentage points to 25% due to excess industry capacity and limited export opportunities [3][4]. - The methanol and DMF products performed well, with methanol revenue rising by 14.5% to 2.678 billion RMB and DMF revenue increasing by 14% to 1.192 billion RMB [4]. - The company is expanding its production capacity significantly, with plans to increase total fertilizer capacity to over 13 million tons by 2027, positioning itself as the largest fertilizer producer in China [7][9]. Group 4: Market Challenges and Competitive Landscape - The fertilizer market faces high competition due to the large number of participants and the homogeneity of basic fertilizer products, leading to strong bargaining power for consumers [8]. - The need for continuous capital investment in production facilities is essential for achieving economies of scale, which can increase profitability pressure during significant price fluctuations [8]. - The company’s expansion strategy is driven by concerns over keeping pace with industry growth, despite the current volatility in product prices [9].

Earnings Announcements - Xiaomi Group, Tongcheng Yilong, Bosideng, Chow Tai Fook, and CSPC Pharmaceutical are set to announce their earnings next week [1] - China Heartland Fertilizer reported a 2% increase in net profit to 420 million yuan for the first three quarters, with a significant 340% increase in sales of automotive urea solution [1] - Sine International reported a mid-term net profit of 408 million HKD, a year-on-year increase of 141.7% [1] - South China Holdings saw a 12% decrease in mid-term net profit to 23.85 million HKD, with an interim dividend of 3.8 HKD cents [1] - Meigao Group's mid-term net profit increased by 73% to 21.78 million HKD, with an interim dividend of 0.05 HKD [1] - Oriental Press Group's mid-term net profit rose by 139.16% to 87.32 million HKD [1] - Hong Kong Financial Holdings turned a profit of 1.473 million HKD in the mid-term [1] Financial Data - Several companies reported varying financial performances, with notable increases in profits for some and significant losses for others [1][2][3] - Lifu International plans to acquire properties in London for 250 million GBP [2] - AV Concept Holdings expects a mid-term net profit increase of no less than 90% [3] - China Unicom added 523,000 fixed broadband users in October [2] Corporate Actions - Fosun Pharma's Gland Pharma was listed on the Indian stock exchanges on November 20 [1] - Lee's Pharmaceutical received approval for the spin-off of its ophthalmology unit [1] - Ping An Securities plans to issue additional shares to its CEO and will resume trading on November 23 [2] - China Evergrande repurchased 2 million shares at a cost of 33.14 million HKD on November 20 [5]

Group 1 - The overall fertilizer market is experiencing a "first decline, then rise" trend in Q1 2025, with initial supply-demand mismatches leading to continued low prices for coal chemical products, including urea and melamine [1] - In March, driven by spring farming demand and increased export expectations, urea prices rebounded quickly, positively impacting downstream product prices [1] - The company's overall gross margin decreased by 4 percentage points year-on-year but increased by nearly 3 percentage points quarter-on-quarter to 14%, indicating a rising trend [1] Group 2 - The company's revenue for Q1 reached 5.846 billion yuan, representing a year-on-year growth of 1.7% and a quarter-on-quarter growth of 2.4% [1] - Net profit attributable to shareholders was 197.5 million yuan, with basic earnings per share at 16.3 cents [1] - The company has strengthened cost control, with the proportion of three expenses decreasing by nearly 1 percentage point year-on-year, particularly financial expenses, which fell by 9% [1] Group 3 - Due to the decline in raw coal prices, the support for urea prices weakened, leading to a larger price drop for urea compared to cost reductions, resulting in a 23% year-on-year decline in overall gross margin [2] - However, with improvements in the fertilizer supply-demand landscape, product prices are gradually recovering, leading to a 26% quarter-on-quarter increase in gross margin [2] - The company's net profit, excluding non-recurring items, saw a significant quarter-on-quarter growth of 89%, indicating a stable upward trend in operations [2]

Financial Performance - In Q1 2025, the company's revenue reached RMB 5,845,825,000, representing a year-on-year increase of 1.7% and a quarter-on-quarter increase of 2.4%[4] - The net profit for the same period was RMB 249,372,000, down 35% year-on-year, while the net profit excluding non-recurring items was RMB 266,799,000, also down 30% year-on-year[4] - The overall gross margin decreased by 4 percentage points year-on-year but increased nearly 3 percentage points quarter-on-quarter to 14%[2] - The company achieved a significant reduction in financial expenses, down 9% year-on-year, and improved the average loan interest rate by 0.7 percentage points[3] - The company reported a quarter-on-quarter gross profit increase of 26%, leading to a significant 89% increase in net profit excluding non-recurring items[4] Asset and Debt Management - Total assets increased by 4% to approximately RMB 33,844,128,000 compared to the beginning of the period, driven by a 133% increase in cash and cash equivalents[5] - The company’s debt-to-asset ratio rose to 62.2% from 61.5% at the beginning of the period[5] - The company plans to increase its capital reserves by 2025 to support project construction, anticipating a slight rise in the debt-to-asset ratio, but expects significant improvement in operational cash flow and other indicators by 2027[23] Market Segmentation and Product Focus - The fertilizer segment accounted for 53% of total revenue, while the chemical segment contributed 42%[12] - The company is focusing on the development of high-efficiency fertilizers, particularly humic acid fertilizers, to meet the growing demand in modern agriculture[12] - The demand for water-soluble fertilizers, controlled-release fertilizers, and humic acid-based efficient fertilizers is increasing due to domestic environmental policies and large-scale land cultivation trends, providing a market foundation for the company's high-end fertilizers[24] - The company aims to upgrade its brand positioning to "China's advocate for efficient fertilizers" and promote scientific fertilization methods through a combination of quality products and services[25] Pricing and Sales Volume - Urea price decreased by 23% year-on-year to 1,592, while compound fertilizer price decreased by 4% year-on-year to 2,599, influenced by geopolitical factors and rising raw material costs[14] - Urea sales volume remained stable at 965,000 tons, with a 5% decrease compared to the previous quarter due to fewer effective sales days during the Spring Festival[15][16] - The sales volume of compound fertilizer increased by 14% year-on-year to 599,000 tons, driven by a new marketing model and enhanced production capacity in Guangxi[16] - Methanol price increased by 4% year-on-year to 2,270, supported by improved supply-demand balance and reduced imports from the Middle East by over 50%[14] Production and Project Development - The company is progressing on several projects, including a 600,000-ton ammonia project in Jiangxi, expected to be operational by Q3 2025[22] - The company plans to complete a 320,000-ton melamine project in Xinjiang by 2026, benefiting from lower raw material costs[22] - New production capacities in Xinjiang and Guangxi are expected to contribute to profit growth in the second half of the year[22] Strategic Initiatives - The company is actively expanding into high-end markets and establishing strategic partnerships with leading pesticide companies to secure sales volume[19] - The company is focusing on a strategy of "total cost leadership + differentiated competition" to enhance its national base layout and improve overall gross margin through advanced production processes[23] - The company has implemented a restricted stock incentive plan for employees, marking the first such plan since its listing in 2006, aimed at retaining core talent[7] Market Outlook - The company is expected to benefit from the gradual relaxation of urea export restrictions, which may alleviate domestic supply-demand imbalances and boost market confidence[25] - The gross margin for urea decreased by 13 percentage points year-on-year to 18%, but showed a recovery trend compared to the previous quarter[20] - The gross margin for methanol increased by 4 percentage points year-on-year to 10%, due to optimized production processes and rising selling prices[20]

CHINA XLX FERTILISER LTD. * 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。 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，本公司將於二零二 五年五月十六日（星期五）舉行董事會會議，其中議程包括考慮及批准刊發本公司及其附 屬公司截至二零二五年三月三十一日止三個月未經審計之第一季度業績公告於香港聯合 交易所有限公司網站。 承董事會命 中國心連心化肥有限公司 董事會主席 劉興旭 香港，二零二五年四月三十日 於本公告日期，本公司執行董事為劉興旭先生、張慶金先生及閆蘊華女士；本公司獨立 非執行董事為王建源先生、李生校先生、王為仁先生及李紅星先生。 * 僅供識別 1866 董事會會議召開日期 ...

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EF001 免責聲明 發行人所發行上市權證/可轉換債券的相關信息 發行人所發行上市權證/可轉換債券 不適用 其他信息 其他信息 不適用 發行人董事 於本公告日期，中國心連心化肥有限公司執行董事為劉興旭先生、張慶金先生及閆蘊華女士；本公司獨立非執行董事為王建源先 生、李生校先生、李紅星先生及王為仁先生。 第 2 頁 共 2 頁 v 1.1.1 第 1 頁 共 2 頁 v 1.1.1 EF001 | 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 | | | --- | --- | | 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。 | | | 股票發行人現金股息公告 | | | 發行人名稱 | 中國心連心化肥有限公司 | | 股份代號 | 01866 | | 多櫃檯股份代號及貨幣 | 不適用 | | 相關股份代號及名稱 | 不適用 | | 公告標題 | 截至2024年12月31日止之末期股息(更新) | | 公告日期 | 2025年4月28日 | | 公告狀態 | 更新公告 | | 更新/撤回理由 | ...