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].

Financial Performance - For Q1 2024, China XLX Fertiliser Ltd. reported unaudited consolidated revenue of approximately RMB 5.75 billion, a decrease of about RMB 529 million or 8% compared to Q1 2023's revenue of approximately RMB 6.279 billion[1]. - The unaudited net profit for Q1 2024 was approximately RMB 383 million, down about RMB 79 million or 17% from approximately RMB 462 million in Q1 2023[1]. Sales Revenue Analysis - Urea sales revenue increased by approximately RMB 41 million or 2% to about RMB 1.994 billion, driven by a 26% increase in sales volume, although this was offset by a 19% decline in average selling price[2]. - The sales revenue of compound fertilizers decreased by approximately RMB 126 million or 8% to about RMB 1.434 billion, primarily due to an 8% drop in average selling price[4]. - Methanol sales revenue rose by approximately RMB 104 million or 20% to about RMB 632 million, attributed to a 26% increase in sales volume[5]. - The sales revenue of automotive urea solution decreased by approximately RMB 30 million or 29% to about RMB 75 million, with sales volume and average price dropping by 11% and 20%, respectively[3]. - The sales revenue of pharmaceutical intermediates fell by approximately RMB 33 million or 23% to about RMB 111 million, primarily due to a 35% decrease in sales volume[9]. Profit Margins - The gross profit margin for DMF improved from 7% in Q1 2023 to 12% in Q1 2024, due to a 22% decrease in average production costs[8]. - The gross profit margin for compound fertilizers increased from approximately 11.7% to 14.7%, supported by a decline in raw material costs[4]. Market Dynamics and Strategy - The raw material coal supply and demand dynamics are changing, leading to a stable increase in prices, which will support the prices of coal chemical products[10]. - Agricultural demand is expected to boost sales of high-nitrogen fertilizers during the peak seasons, supporting the group's increased sales of efficient compound fertilizers[10]. - The fertilizer export window will alleviate domestic supply pressure and enhance market sentiment, further optimizing the supply-demand structure of fertilizers[10]. - The chemical products market is anticipated to have significant growth potential due to the steady recovery of the domestic economy and the rebound in key industries such as real estate and new energy[10]. - The company is committed to a "low-cost + differentiation" strategy, focusing on high-quality development through refined management and flexible production[11]. - The company plans to enhance market share by capitalizing on the fertilizer industry's consolidation and transformation cycle while ensuring stable cash flow[11]. - The Guangxi base's compound fertilizer phase one project is expected to be completed and put into operation by the end of this year, establishing a competitive benchmark base in South China[11]. - The company is accelerating the transformation of its marketing model, leveraging big data to enhance integrated service capabilities for large agricultural households[11].

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].

Revenue and Profitability - Revenue for 2023 was RMB 23,475 million, a 1.7% increase from RMB 23,072 million in 2022[36]. - Net profit decreased by 9% to RMB 1,637 million in 2023 from RMB 1,808 million in 2022[36]. - Basic and diluted earnings per share fell by 11.6% to RMB 96.95 in 2023 compared to RMB 109.67 in 2022[36]. - Revenue for FY2023 increased by RMB 403 million or approximately 2% to RMB 23,475 million from RMB 23,072 million in FY2022[81]. - Urea sales revenue increased by approximately RMB 44 million or about 1% to approximately RMB 6,874 million in fiscal year 2023, driven by a 9% increase in sales volume, although offset by a 7% decline in average selling price[82]. - The gross profit margin for urea increased by approximately 1 percentage point to about 29% in fiscal year 2023, primarily due to a 9% decrease in average sales cost[84]. - Revenue from liquid ammonia sales increased by approximately RMB 54 million or approximately 3% from RMB 2,037 million in FY2022 to RMB 2,091 million in FY2023, driven by a 17% YoY sales growth[104]. - The gross profit margin for medical intermediates decreased by approximately 4 percentage points to 9% in fiscal year 2023, influenced by an 8% increase in production costs[103]. Strategic Goals and Development Plans - The Jiangxi base aims to surpass RMB 10 billion in revenue and achieve RMB 1 million in per capita labor efficiency over the next three years[11]. - The Xinjiang base targets to establish three leading brands in chemical fertilizers, melamine, and polyformaldehyde, contributing to a 10 billion base as part of the goal to reach a 100 billion market capitalization[13]. - The Henan base will focus on optimizing existing assets and enhancing incremental assets, implementing a strategy of "low-cost + differentiation + efficient operation" over the next three years[9]. - The Group is committed to becoming China's most respected fertilizer enterprise group, emphasizing high-efficiency and high-end development[7]. - The Group's future plans include the digital and intelligent transformation of its chemical industry park to improve operational advantages[9]. - The Group aims to enhance brand competitiveness and increase market share through strengthened product R&D and service upgrades[131]. - The Group plans to increase international market development to boost fertilizer exports amid a recovering international fertilizer market[129]. Research and Development - The Group has established scientific research platforms, including the "National Enterprise Technology Centre" and "Postdoctoral Research Station," to support its technology-leading development strategy[22]. - The company has established a National Post-Doctoral Scientific Research Workstation to enhance research capabilities[46]. - The company is investing 50 million RMB in research and development for new technologies aimed at enhancing product efficiency[184]. Operational Efficiency and Technology - The company achieved a comprehensive energy consumption of 1,175 kilograms of standard coal per ton of synthetic ammonia, maintaining its efficiency leadership for twelve consecutive years[51]. - The company’s production facilities utilize new coal gasification technology, enhancing operational efficiency[36]. - The Group achieved industry-leading energy consumption indicators, ensuring stable revenue growth despite planned maintenance[77]. - The Group's strategic positioning includes a focus on "fertilizer as foundation, fertilizer and chemical side by side" to enhance operational efficiency[8]. Market Performance and Sales - Revenue from compound fertilizers increased by approximately RMB 14 million or about 0.2% to approximately RMB 6,130 million in fiscal year 2023, supported by a 16% increase in sales volume[90]. - Methanol sales revenue increased by approximately RMB 56 million or about 2% to approximately RMB 2,339 million in fiscal year 2023, driven by a 9% increase in sales volume despite a 6% decline in average selling prices[92]. - Revenue from melamine decreased by approximately RMB 183 million or about 19% to approximately RMB 784 million in fiscal year 2023, primarily due to a 22% decrease in average selling prices[97]. - The new production capacity at the Xinxiang base contributed to a 112% year-on-year increase in urea export volume, expanding into international markets such as Brazil and India[79]. Financial Management and Stability - The Group's net debt increased to RMB 16,380,428,000 in 2023 from RMB 16,007,783,000 in 2022, reflecting a year-on-year increase of 2.3%[124]. - The gearing ratio improved to 70.59% in 2023, down from 72.02% in 2022, indicating a decrease of 1.43 percentage points[124]. - The Group's total liabilities to total assets ratio decreased to 63.9% as of December 31, 2023, down from 65.7% in the previous year, a reduction of 1.8 percentage points[125]. - Finance costs decreased by approximately RMB 82 million or approximately 12% from RMB 662 million in FY2022 to RMB 580 million in FY2023, due to reduced interest-bearing borrowings and lower loan interest rates[115]. - Income tax expense decreased by approximately RMB 70 million or approximately 19% from RMB 372 million in FY2022 to RMB 302 million in FY2023[116]. Corporate Governance and Management - The executive management team includes experienced professionals with over 20 years in the chemical fertilizer industry, enhancing strategic decision-making capabilities[176][179][182]. - The financial management is overseen by a qualified executive director with extensive experience in accounting and finance, ensuring sound fiscal practices[182]. - The Group's leadership includes individuals with significant accolades, such as the "National Labour Day Medal" and various provincial honors, indicating a commitment to excellence[176][182]. - The Company has a strong management team with extensive backgrounds in finance and management, enhancing its operational capabilities[198][199]. Employee and Community Engagement - The Group had 10,390 employees as of December 31, 2023, an increase from 9,313 in 2022, reflecting a growth of approximately 11.6%[169]. - Employee remuneration packages are reviewed periodically based on market conditions and individual performance, with additional benefits including medical and life insurance[169]. - The company donated RMB 1 million to support rural revitalization efforts in 2023[49]. Shareholder and Market Outlook - A final dividend of RMB 0.24 per share is proposed for the year ended December 31, 2023, down from RMB 0.25 per share in 2022[133]. - The company provided a positive outlook for the next fiscal year, projecting a revenue growth of 10% to 12%[184]. - Future guidance suggests a positive outlook for revenue growth, driven by strategic initiatives and market demand[200].

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 ...

Financial Performance - For the year ended December 31, 2023, the total revenue was RMB 23,475,338 thousand, an increase from RMB 23,071,897 thousand in 2022, representing a growth of approximately 1.76%[2] - The gross profit for 2023 was RMB 4,187,020 thousand, down from RMB 4,348,882 thousand in 2022, indicating a decrease of about 3.71%[2] - The net profit for the year was RMB 1,637,294 thousand, compared to RMB 1,808,175 thousand in the previous year, reflecting a decline of approximately 9.45%[2] - Basic and diluted earnings per share for 2023 were RMB 96.95, down from RMB 109.67 in 2022, a decrease of about 11.6%[2] - The company reported a net profit of RMB 1,637,294,000 for the year, reflecting strong operational performance[10] - The group reported a pre-tax profit of RMB 2,180,657 thousand for the year, down from RMB 2,180,657 thousand in the previous year[14] - The profit attributable to equity holders of the parent company for 2023 was RMB 1,186,882,000, down from RMB 1,326,211,000 in 2022, indicating a decline of approximately 10.5%[20] - Net profit decreased by RMB 171 million or about 9% from RMB 1,808 million in FY2022 to RMB 1,637 million in FY2023[42] Revenue and Sales - Total revenue for the year reached RMB 23,475,338,000, with a significant contribution from the automotive urea segment at RMB 8,519,314,000[10] - Sales of products amounted to RMB 23,275,396 thousand in 2023, compared to RMB 23,023,831 thousand in 2022, reflecting a growth of 1.1%[13] - Urea sales revenue increased by approximately RMB 44,000,000 or about 1% to RMB 6,874,000,000 in 2023, driven by a 9% increase in sales volume, despite a 7% decrease in average selling price[29] - Sales revenue of automotive urea solution decreased by approximately RMB 109 million or about 20% to approximately RMB 434 million in FY2023, primarily due to a 9% drop in average selling price and a 12% decline in sales volume[30] - Compound fertilizer sales revenue increased by approximately RMB 14 million or about 0.2% to approximately RMB 6,130 million in FY2023, driven by a 16% increase in sales volume despite a 13% decrease in average selling price[31] - Methanol sales revenue rose by approximately RMB 56 million or about 2% to approximately RMB 2,339 million in FY2023, attributed to a 9% increase in sales volume while average selling price fell by 6%[32] - Melamine sales revenue decreased by approximately RMB 183 million or about 19% to approximately RMB 784 million in FY2023, mainly due to a 22% decline in average selling price, partially offset by a 4% increase in sales volume[33] - Pharmaceutical intermediates sales revenue increased by approximately RMB 176 million or about 40% to approximately RMB 616 million in FY2023, driven by a 14% increase in average selling price and a 23% rise in sales volume[34] - Liquid ammonia sales revenue increased by approximately RMB 54 million or about 3% to approximately RMB 2,091 million in FY2023, supported by a 17% increase in sales volume despite a 13% decline in average selling price[35] - DMF achieved sales revenue of approximately RMB 1,047 million in FY2023, with sales volume surpassing 231,000 tons, benefiting from stable production and market expansion efforts[36] Expenses and Costs - The cost of goods sold increased to RMB 19,288,318 thousand in 2023 from RMB 18,723,015 thousand in 2022, indicating a rise of 3.03%[14] - Selling and distribution expenses rose by approximately RMB 89 million or about 17% to approximately RMB 618 million in FY2023, driven by increased marketing activities and sales channel expansion[38] - General and administrative expenses increased by approximately RMB 227 million to approximately RMB 1,299 million in FY2023, mainly due to higher personnel costs and increased operational expenses related to business expansion[39] - Financial costs decreased by approximately RMB 82 million or about 12% from RMB 662 million in FY2022 to RMB 580 million in FY2023 due to reduced borrowing scale and lower loan interest rates[40] - Income tax expenses decreased by approximately RMB 70 million or about 19% from RMB 372 million in FY2022 to RMB 302 million in FY2023[41] Assets and Liabilities - Total assets as of December 31, 2023, amounted to RMB 29,133,496 thousand, an increase from RMB 27,867,176 thousand in 2022, representing a growth of approximately 4.54%[3] - The total liabilities increased to RMB 18,622,498 thousand in 2023 from RMB 18,299,348 thousand in 2022, marking an increase of about 1.76%[4] - Trade receivables rose to RMB 495,910,000 in 2023 from RMB 470,624,000 in 2022, reflecting an increase of approximately 5.1%[21] - Trade payables increased significantly to RMB 1,388,617,000 in 2023 from RMB 645,698,000 in 2022, indicating a growth of approximately 115%[23] - The company’s bank loans due within one year decreased to RMB 4,088,482,000 in 2023 from RMB 4,966,043,000 in 2022, a reduction of about 17.7%[25] - Approximately RMB 4,469 million or about 38.41% of the company's debt is due within one year as of December 31, 2023[49] - The debt-to-equity ratio improved from 72.02% in FY2022 to 70.59% in FY2023, indicating better capital management[43] - The group's total liabilities to total assets ratio decreased from 65.7% in the previous year to 63.9%[43] Investments and Future Outlook - Capital expenditures amounted to RMB 2,484,743,000, indicating ongoing investments in property, plant, and equipment[10] - The company plans to enhance international market development to boost fertilizer export volumes amid recovering global fertilizer demand[44] - The annual production capacity of 60,000 tons of urea-formaldehyde project in Xinjiang and the first phase of the compound fertilizer project in Guangxi are expected to be completed in Q4 2023[44] - The company aims to strengthen product R&D and marketing transformation to enhance brand competitiveness and expand market share[44] Shareholder Information - The company proposed a dividend for the year, details of which are disclosed in the financial statements[2] - The board proposed a final dividend of RMB 0.24 per share for the year ending December 31, 2023, compared to RMB 0.25 per share for 2022, pending shareholder approval[17][18] - The basic and diluted earnings per share for 2023 were calculated based on a weighted average of 1,224,222,000 shares, an increase from 1,209,288,000 shares in 2022[19][20] - The company repurchased a total of 9,358,000 shares at a total cost of HKD 39,154,000, representing approximately 0.77% of the issued shares as of December 31, 2023[55] - The highest price paid for repurchased shares was HKD 4.5, while the lowest was HKD 3.41, with the majority of repurchases occurring in May (8,543,000 shares) and June (815,000 shares)[56] Workforce and Market Conditions - The employee count increased to 10,390 as of December 31, 2023, up from 9,313 in the previous year, indicating growth in workforce[57] - The consumer price index in China increased by about 0.2% for the year ending December 31, 2023, compared to a 2% increase in 2022, indicating low inflation impact on the company's performance[48]

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 截至二零二三年九月三十日止九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」）截至二零二三年九月三十日止九個月（「二零二三年首九個月」）的未經審核業 務更新。 前三季度，受原料成本支撑不足，供過於求的市場格局影響，煤化工相關產品價格震盪 下行，對本集團化肥及化工品價格造成負面影響，但本集團結合市場需求，根據「以肥為 基 肥化並舉」的發展戰略，持續加大柔性調節，最大程度降低市場波動對業績帶來的不利 影響。進入第三季度，隨著成本支撐漸強，各產品價格環比窄幅上漲，業績指標明顯改 善。同時，本集團資產負債率及有息負債總額持續降低，資產結構進一步優化。 本集團二零二三年首九個月的未經審核綜合收入由截至二零二二年九月三十日止九個月 （「二零二二年首九個月」）的約人民幣17,5 ...

Financial Performance - The unaudited consolidated revenue for 1H2023 decreased by approximately RMB155 million or 1% to approximately RMB12,059 million from RMB12,214 million in 1H2022[17]. - The unaudited consolidated net profit for 1H2023 decreased by approximately RMB526 million or 40% to approximately RMB778 million from RMB1,304 million in 1H2022[17]. - The total comprehensive income attributable to the owners of the parent decreased by approximately RMB414 million or 43% to approximately RMB546 million in 1H2023 from RMB960 million in 1H2022[17]. - Profit for the period decreased by approximately RMB526 million or 40% from RMB1,304 million in 1H2022 to approximately RMB778 million in 1H2023, primarily due to a decrease in gross profit[33]. - Profit before tax decreased to RMB 925,758, a decline of 42.4% compared to RMB 1,606,295 in the previous year[88]. - Basic and diluted earnings per share were 44.8 RMB cents, a decrease from 78.2 RMB cents in the same period of 2022[88]. - For the six months ended June 30, 2023, the group reported a profit of RMB 546,194,000, compared to RMB 959,576,000 for the same period in 2022, reflecting a decrease of approximately 43%[96]. Revenue Breakdown - Revenue from urea sales increased by approximately RMB80 million or 2% YoY, reaching approximately RMB3,518 million for 1H2023, driven by a 13% increase in sales volume despite a 10% decrease in average selling price[19]. - Revenue from vehicle urea solution sales decreased by approximately RMB65 million or 22% YoY to approximately RMB225 million for 1H2023, attributed to a 5% decrease in average selling price and a 19% decrease in sales volume[19]. - Revenue from compound fertilisers decreased by approximately RMB555 million or 15% YoY to approximately RMB3,208 million for 1H2023, due to a 5% decrease in sales volume and a 10% decrease in average selling price[20]. - Revenue from methanol sales decreased by approximately RMB184 million or 16% YoY to approximately RMB977 million for 1H2023, resulting from a 9% decrease in average selling price and an 8% decrease in sales volume[20]. - Revenue from melamine sales decreased by approximately RMB175 million or 30% YoY to approximately RMB412 million for 1H2023, primarily due to a 34% decrease in average selling price[21]. - Revenue from medical intermediate products increased by approximately RMB77 million or 35% YoY to approximately RMB299 million for 1H2023, supported by an 8% increase in average selling price and a 25% increase in sales volume[21]. - Sales revenue of liquid ammonia increased by approximately RMB186 million or 20% from RMB931 million in 1H2022 to approximately RMB1,117 million in 1H2023, driven by a 50% YoY increase in sales volume[23]. Cost and Profitability - Gross profit margin for urea sales decreased by approximately 6 percentage points from 35% in 1H2022 to 29% in 1H2023, primarily due to a larger decline in average selling price compared to cost[19]. - Gross profit margin for compound fertilisers decreased by approximately 4 percentage points to 12% in 1H2023 from 16% in 1H2022, mainly due to the decline in average selling price[20]. - Despite a gross profit margin of methanol decreasing to -1.7% in 1H2023, the marginal profit contribution reached 13% through improved self-conversion and product structure adjustments[21]. - Gross profit margin for melamine products decreased by approximately 22 percentage points from 58% in 1H2022 to 36% in 1H2023, driven by a significant drop in average selling price[21]. - The gross profit margin of medical intermediate products decreased by approximately 1 percentage point from 17% in 1H2022 to 16% in 1H2023, attributed to a 10% YoY increase in average raw material costs[22]. - The gross profit margin of liquid ammonia decreased by approximately 16 percentage points from 36% in 1H2022 to 20% in 1H2023, mainly due to a decrease in average selling price[23]. Expenses and Costs Management - Selling and distribution expenses decreased by approximately RMB18 million or 5% from RMB329 million in 1H2022 to RMB311 million in 1H2023[28]. - General and administrative expenses decreased by approximately RMB12 million or 2% from RMB652 million in 1H2022 to RMB640 million in 1H2023, despite increases in R&D and environmental protection expenses[29]. - Finance costs decreased by approximately RMB11 million or 3% from RMB335 million in 1H2022 to RMB324 million in 1H2023, mainly due to a decrease in average interest rates[33]. - Income tax expense decreased by approximately RMB154 million or 51% from RMB302 million in 1H2022 to RMB148 million in 1H2023, due to a decline in profits and preferential tax rates for high-tech enterprises[33]. Strategic Initiatives - The company adheres to a development strategy of "Fertiliser as foundation, fertiliser and chemical side by side" and an operating strategy of "low-cost and differentiation"[9]. - The Group aims to achieve high-efficiency, high-end, lean development as part of its core mission[7]. - The company is committed to enhancing key capabilities, including technological research and development and marketing differentiation[10]. - The strategic positioning principle emphasizes never deviating from the main course and establishing the position as "Industry No.1"[10]. - The Group anticipates a rebound in energy prices and global food prices, which will support fertilizer prices in the second half of the year[37]. - The Group plans to enhance innovation capabilities and promote new high-efficiency fertilizers to strengthen product competitiveness[37]. - The Group aims to balance project funding with operational cash flows to reduce both interest and liability indicators[37]. Market Conditions - The supply and demand situation in the fertiliser market trended soft, with coal prices under pressure, leading to a decline in fertiliser prices[16]. - The chemical product market remained in a downturn, with downstream demand recovery falling short of expectations, impacting the Group's results negatively[16]. - Future outlook remains positive with expectations of stable demand in the fertilizer and chemical markets, supporting ongoing production and sales efforts[108]. Corporate Governance and Compliance - The Company complied with all provisions of the Corporate Governance Code for the six months ended June 30, 2023[68]. - The Audit Committee reviewed the accounting principles and internal control matters for the interim results for the six months ended June 30, 2023[67]. - The company adopted new accounting standards effective from January 1, 2023, with no material impact on financial performance[107]. Shareholder Information - Directors and chief executives hold significant shares, with Mr. Liu Xingxu owning 415,877,999 shares, representing 33.86% of the company's issued share capital[40]. - Ms. Yan Yunhua holds 256,265,000 shares, accounting for 20.86% of the company's issued share capital[40]. - As of June 30, 2023, no other directors or chief executives had interests in the shares or debentures of the Company beyond those disclosed[42]. Employee and Management Compensation - For the six months ended June 30, 2023, the total compensation paid to key management personnel was RMB 26,071,000, an increase from RMB 25,805,000 in 2022, reflecting a growth of 1.03%[178]. - Directors' fees increased to RMB 825,000 in 2023 from RMB 525,000 in 2022, representing a significant increase of 57.14%[178]. - Performance-related bonuses for the period were RMB 22,650,000, up from RMB 22,150,000 in the previous year, indicating a growth of 2.26%[178].

Financial Performance - For the six months ended June 30, 2023, the revenue was RMB 12,059,121 thousand, a decrease of 1.26% compared to RMB 12,213,886 thousand for the same period in 2022[2] - Gross profit for the period was RMB 2,110,699 thousand, down 26.2% from RMB 2,861,627 thousand in the previous year[2] - Profit before tax decreased to RMB 925,758 thousand, representing a decline of 42.4% from RMB 1,606,295 thousand in the prior year[2] - Net profit for the period was RMB 777,559 thousand, a decrease of 40.3% compared to RMB 1,304,459 thousand in the same period last year[3] - Basic and diluted earnings per share were RMB 44.8, down from RMB 78.2 in the previous year[3] - The company reported a net profit of RMB 777,559,000 for the six months ended June 30, 2023, down from RMB 1,304,459,000 in the same period of 2022, indicating a decline of approximately 40%[19] - The unaudited consolidated net profit for the first half of 2023 decreased by approximately RMB 526 million or 40% to about RMB 778 million compared to the first half of 2022[44] Assets and Liabilities - Total assets as of June 30, 2023, were RMB 27,505,718 thousand, a slight decrease from RMB 27,867,176 thousand at the end of 2022[5] - Current liabilities totaled RMB 9,792,575 thousand, down from RMB 10,540,755 thousand in the previous year[5] - Total equity increased to RMB 9,877,545 thousand from RMB 9,567,828 thousand at the end of 2022[7] - Non-current assets rose to RMB 22,445,724 thousand, compared to RMB 21,636,289 thousand at the end of 2022[4] - The company’s total liabilities increased, reflecting ongoing investments and operational costs, although specific figures were not disclosed in the provided content[19] - As of June 30, 2023, the company's net debt amounted to RMB 15,323,122,000, a decrease from RMB 16,007,783,000 as of December 31, 2022, reflecting a reduction in financial leverage[61] - The asset-liability ratio improved to 70.50% as of June 30, 2023, down from 72.02% at the end of 2022, indicating better capital management[67] Revenue and Sales Performance - For the six months ended June 30, 2023, the company reported total revenue of RMB 9,877,545 thousand, an increase from RMB 9,567,828 thousand for the same period in 2022, representing a growth of approximately 3.2%[9] - Urea sales revenue increased by approximately RMB 80 million or 2% to about RMB 3,518 million in the first half of 2023, driven by a 13% increase in sales volume[45] - The sales revenue of automotive urea solution decreased by approximately RMB 65 million or 22% to about RMB 225 million in the first half of 2023, due to a 5% and 19% decrease in average selling price and sales volume, respectively[46] - The sales revenue of compound fertilizer decreased by approximately RMB 555 million or 15% to RMB 3,208 million in the first half of 2023, primarily due to a 5% decrease in sales volume and a 10% decrease in average selling price[47] - Methanol sales revenue fell by approximately RMB 184 million or 16% to RMB 977 million in the first half of 2023, attributed to a 9% decrease in average selling price and an 8% decrease in sales volume[48] - The sales revenue of melamine decreased by approximately RMB 175 million or 30% to RMB 412 million in the first half of 2023, primarily due to a 34% decrease in average selling price, despite a 6% increase in sales volume[50] - The sales revenue of pharmaceutical intermediates increased by RMB 77 million or 35% to RMB 299 million in the first half of 2023, driven by an 8% increase in average selling price and a 25% increase in sales volume[51] - The sales revenue of liquid ammonia rose by approximately RMB 186 million or 20% to RMB 1,117 million in the first half of 2023, due to a 50% increase in sales volume, although partially offset by a 20% decrease in average selling price[52] Operational Strategy and Future Plans - The company plans to continue expanding its product offerings, focusing on differentiated products such as urea, compound fertilizers, and methanol, which are key to its growth strategy[11] - The company plans to complete the 700,000-ton urea project at the Xinxiang base in Q4 2023, enhancing production capacity[62] - The company is also developing a 1 million-ton ecological fertilizer project at the Huludao base, expected to be operational by the end of 2023[62] - The company is focusing on enhancing its R&D capabilities for new high-efficiency fertilizers to establish a competitive advantage through product differentiation[62] - The company is committed to enhancing its market presence through strategic expansions and potential acquisitions in the fertilizer and chemical sectors[11] Employee and Compensation - As of June 30, 2023, the group employed 9,817 staff, an increase from 9,313 employees as of December 31, 2022[74] - Employee compensation is determined based on market conditions and individual performance, with additional benefits including medical and life insurance[74] - The performance of marketing personnel was affected by a decline in overall business performance this year[74] Risk Management and Legal Standing - The company is actively monitoring market risks, including fluctuations in product prices and raw material costs, to mitigate financial exposure[63] - The company has not encountered any significant contingent liabilities or major litigation as of June 30, 2023, indicating a stable legal standing[68] Share Repurchase - The company has repurchased 8,543,000 shares, representing 0.7% of the total issued share capital, at a total cost of HKD 36,246,000 from January 1 to June 1, 2023[72] - The company repurchased a total of 9,358,000 shares, representing 0.76% of the total issued share capital as of June 30, 2023, with a total cost of HKD 39,154,000 (excluding transaction fees)[73] - The highest repurchase price during the period was HKD 4.5 per share, while the lowest was HKD 3.41 per share[73]