Strategic Positioning and Development Principles - The company's strategic positioning includes adhering to the development strategy of "Fertiliser as foundation, fertiliser and chemical side by side" and the operating strategy of "low-cost and differentiation" [5] - The company aims to achieve high-efficiency, high-end, lean development in the Group as its core mission [5] - The company follows six development principles, including strategic positioning direction, customer orientation, pursuing excellence, pragmatic and highly efficient management, key capabilities enhancement, and preventing and controlling development risks [6][7] - The company is committed to becoming China's most respected fertiliser enterprise group [5] Company Overview and Governance - The company's headquarters is located in Xinxiang Economic Development Zone, Henan Province, PRC [10] - The company's stock code on the Hong Kong Stock Exchange is 1866 [10] - The company's corporate website is www.chinaxlx.com.hk [10] - The company's board includes executive directors and independent non-executive directors, with Liu Xingxu as the Chairman of the Board [8] - The company's auditor is Ernst & Young LLP, with Yong Kok Keong as the partner-in-charge [9] - The company's principal bankers include China Construction Bank, Agricultural Bank of China, Bank of China, Industrial & Commercial Bank of China, Bank of Communications, and HSBC [9] Financial Performance and Key Metrics - Total revenue increased by approximately RMB2 million or 0.02% from RMB12,059 million in 1H2023 to RMB12,061 million in 1H2024 [11] - Net profit increased by approximately RMB160 million or 21% from RMB778 million in 1H2023 to RMB938 million in 1H2024 [11] - Gross profit increased by 12% YoY due to declining raw material costs [11] - Revenue for 2024 remained stable at RMB 12,060,957 thousand, showing minimal growth compared to RMB 12,059,121 thousand in 2023 [101] - Gross profit increased to RMB 2,355,720 thousand in 2024, up from RMB 2,110,699 thousand in 2023, reflecting improved cost management [101] - Profit before tax rose to RMB 1,122,610 thousand in 2024, compared to RMB 925,758 thousand in 2023, indicating stronger operational performance [101] - Net profit attributable to owners of the parent increased to RMB 686,996 thousand in 2024 from RMB 546,194 thousand in 2023 [101] - Basic earnings per share grew to RMB 56.4 cents in 2024, up from RMB 44.8 cents in 2023 [101] - Total assets increased to RMB 31,283,035 thousand in 2024, compared to RMB 29,133,496 thousand in 2023, driven by growth in non-current assets [103] - Cash and cash equivalents significantly increased to RMB 2,014,075 thousand in 2024 from RMB 1,162,558 thousand in 2023, reflecting improved liquidity [103] - Total equity rose to RMB 11,676,254 thousand in 2024, up from RMB 10,510,998 thousand in 2023, indicating stronger financial health [105] - Non-current liabilities decreased slightly to RMB 8,131,009 thousand in 2024 from RMB 8,178,917 thousand in 2023, showing reduced long-term debt burden [105] - Retained profits grew to RMB 3,774,432 thousand in 2024, up from RMB 3,378,490 thousand in 2023, reflecting improved profitability [107] - Total equity increased to RMB 11,676,254,000 as of 30 June 2024, up from RMB 10,510,998,000 at the beginning of the year [109] - Profit for the period reached RMB 686,996,000, contributing to the overall equity growth [109] - Net cash flows generated from operating activities amounted to RMB 2,075,084,000 for the six months ended 30 June 2024 [111] - Cash and cash equivalents at the end of the year stood at RMB 2,014,075,000, a significant increase from RMB 1,162,558,000 at the beginning of the year [113] - The company received government grants totaling RMB 49,214,000 during the period [111] - Proceeds from disposal of property, plant, and equipment were RMB 814,550,000, a substantial increase from RMB 33,004,000 in the same period last year [111] - Dividends paid to non-controlling shareholders amounted to RMB 446,138,000 [111] - Loans and borrowings proceeds were RMB 4,892,178,000, slightly higher than the previous year's RMB 4,880,817,000 [111] - Repayments of loans and borrowings were RMB 4,029,744,000, a decrease from RMB 5,292,047,000 in the same period last year [111] Product Performance and Segment Analysis - Urea sales revenue increased by approximately RMB316 million or 9% from RMB3,518 million in 1H2023 to RMB3,834 million in 1H2024 [12] - Urea sales volume increased by 25% YoY, while average selling price decreased by 13% YoY [12] - Urea gross profit margin increased by 2 percentage points from 29% in 1H2023 to 31% in 1H2024 [12] - Urea production output increased by 24% YoY due to released production capacity [12] - Urea solution for vehicle sales revenue decreased by approximately RMB59 million or 26% from RMB225 million in 1H2023 to RMB166 million in 1H2024 [12] - Urea solution for vehicle gross profit margin decreased by 6 percentage points to 18% in 1H2024 [12] - Compound fertilisers revenue increased by RMB 202 million or 6% to RMB 3,410 million in 1H2024, driven by a 13% YoY increase in sales volume, partially offset by a 6% YoY decrease in average selling price [13] - Compound fertilisers gross profit margin rose by 6 percentage points to 18% in 1H2024, due to an 18% YoY decrease in potash procurement price and a 23% YoY increase in high-efficiency compound fertiliser sales [13] - Methanol revenue increased by RMB 314 million or 32% to RMB 1,291 million in 1H2024, driven by a 31% YoY increase in sales volume and a 1% YoY increase in average selling price [13] - Methanol gross profit margin improved by 10 percentage points to 8% in 1H2024, due to a 9% YoY decrease in average cost of sales [13] - Melamine revenue decreased by RMB 15 million or 4% to RMB 397 million in 1H2024, mainly due to a 6% YoY decrease in average selling price [14] - Melamine gross profit margin decreased by 6 percentage points to 30% in 1H2024, due to a 6% YoY decrease in average selling price [14] - DMF revenue increased by RMB 72 million or 14% to RMB 595 million in 1H2024, driven by a 31% YoY increase in sales volume, despite a 13% YoY decrease in average selling price [14] - DMF gross profit margin increased by 2 percentage points to 13% in 1H2024, due to a 15% YoY reduction in average cost through production technology innovation and equipment improvement [14] - Revenue from the medical intermediate segment decreased by RMB65 million (22%) YoY to RMB234 million in 1H2024, driven by a 33% YoY decline in sales volume [15] - Gross profit margin of the medical intermediate segment dropped by 17 percentage points to -1% in 1H2024 due to a 38% YoY increase in average production costs [15] - Other income, net increased by RMB22 million (24%) YoY to RMB112 million in 1H2024, primarily due to a RMB31 million rise in subsidy income [15] - The company operates in seven reportable segments: urea, urea solution for vehicles, compound fertilizer, methanol, melamine, DMF, and medical intermediates [122] - Total revenue for the six months ended 30 June 2024 was RMB 12,060,957,000, with urea contributing the largest share at RMB 3,834,000,000 [126] - Segment profit for the period was RMB 2,355,720,000, with urea generating the highest segment profit of RMB 1,181,231,000 [126] - Other products, including liquid ammonia, organic amines, humic acid, and furfuryl alcohol, contributed sales revenue of RMB 668 million, RMB 275 million, RMB 201 million, and RMB 163 million respectively [127] - Profit before tax for the period was RMB 1,122,610,000, with income tax expense of RMB 184,124,000, resulting in a net profit of RMB 938,486,000 [126] - Unallocated expenses for the period amounted to RMB 980,827,000, primarily consisting of other income, other expenses, selling and distribution expenses, general and administrative expenses, finance costs, and income tax expense [126] - Interest income for the period was RMB 13,714,000, while finance costs were RMB 265,997,000 [126] Expenses and Costs - Selling and distribution expenses rose by RMB67 million (22%) YoY to RMB378 million in 1H2024, driven by increased advertising and sales performance commissions [16] - General and administrative expenses increased by RMB62 million (9.7%) YoY to RMB702 million in 1H2024, mainly due to higher management salaries and service fees [16] - Finance costs decreased by RMB58 million (18%) YoY to RMB266 million in 1H2024, supported by lower interest rates and early repayment of high-interest borrowings [18] - Employee benefit expenses, including salaries and bonuses, rose to RMB 1,221,372 thousand in 2024 from RMB 1,076,976 thousand in 2023 [145] Market and Industry Outlook - The company expects compound fertilizers to perform better in 2H2024, with industrial demand for urea significantly increasing due to national policy requirements [24] - Domestic economic recovery is expected to improve in the second half of the year, with stable coal prices and balanced supply and demand in the fertilizer industry [27] - Urea demand is projected to increase significantly due to government-mandated urea denitrification upgrades in the power sector [27] - The company is leveraging big data and transforming its sales structure to focus on large-scale farmers, enhancing brand influence through differentiated products and precision services [27] - The company is strengthening technical upgrades and investing in advanced technologies to maximize investment returns [27] - Domestic policy adjustments have led to a significant increase in volume, impacting overall cash flow [27] Shareholder and Equity Information - Ms. Yan Yunhua holds 21.18% of the company's issued shares, with 257,166,000 shares in total [31] - Pioneer Top Holdings Limited holds 35.11% of the company's issued shares, with 426,344,999 shares [35] - Mirth Power Limited holds 17.45% of the company's issued shares, with 211,939,848 shares [35] - The Share Award Plan is valid for 10 years from 17 May 2024, with a grant price of HK3.86 per share [74][75] - The company repurchased 4,336,000 issued shares through the SEHK spot market at a total consideration of approximately HK3.795 to HK$4.15 [84][86] - The share repurchase was based on the company's confidence in its long-term business prospects and potential growth, aiming to optimize the capital structure and improve earnings per share, net assets per share, and overall shareholder returns [84][85] - No equity-linked agreements were entered into by the company during the reporting period, except for the disclosed Share Award Plan [77][79] - The company confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers during the six months ended 30 June 2024 [81][83] - No incidents of non-compliance with the Employees Written Guidelines for securities transactions were noted during the reporting period [82][83] - The company did not hold any treasury shares as of 30 June 2024, and no other listed securities were purchased, sold, or redeemed during the period [87] Debt and Liquidity Management - The Group's debt maturing in less than one year as of 30 June 2024 is approximately RMB 5,020,000,000, representing 41.10% of total debts, compared to RMB 4,468,625,000 (38.41%) as of 31 December 2023 [50] - The gearing ratio (total debt divided by total assets) as of 30 June 2024 is 62.7%, a decrease of 1.3 percentage points compared to 31 December 2023 [52] - The Group's revenue and costs are primarily denominated in RMB, with some costs in HKD, USD, or SGD [45] - The consumer price index in China increased by 0.1% YoY for the six months ended 30 June 2024, with no significant impact on the Group's operating results [46] - The Group has no material contingent liabilities or significant litigation/arbitration as of 30 June 2024 [53][54] - No significant investments were made during the six months ended 30 June 2024 [56] - The Group is exposed to market risks including changes in product selling prices, raw material costs (mainly coal), and fluctuations in interest and exchange rates [42] - Commodity price risk arises from fluctuations in product sale prices and raw material costs [43] - Interest rate risk is primarily related to the Group's long-term debt obligations subject to floating rates [44] - The Group monitors liquidity risk by balancing funding continuity and flexibility through bank overdrafts and loans [50] - The Group's debt-to-asset ratio decreased to 62.7% as of the first half of 2024, down by 1.3 percentage points from 64% at the end of 2023 [174][176] - Total interest-bearing bank and other borrowings amounted to RMB 12,213,223,000 as of 30 June 2024, compared to RMB 11,633,132,000 at the end of 2023 [171] - Secured bank loans totaled RMB 1,528,279,000, secured by the Group's property, plant, and equipment [172] - Interest expenses capitalized to property, plant, and equipment during the period were RMB 4,070,000, a significant decrease from RMB 13,322,000 in the same period of 2023 [175][176] - Bank loans repayable within one year or on demand increased to RMB 4,731,317,000 as of 30 June 2024, up from RMB 4,088,482,000 at the end of 2023 [171] Investments and Disposals - Xinjiang XLX Energy Chemicals Co., Ltd. disposed of 100% equity interests in Manas Tianxin Coal CO., LTD for a total consideration of approximately RMB1,374 million [88][90] - No significant investments were made during the six months ended 30 June 2024 [56] - The company has no plans for material investments or capital assets as of 30 June 2024 [60] Employee and Training Information - The Group had 10,781 employees as of 30 June 2024, an increase from 10,390 employees as of 31 December 2023 [92][95] - Marketing personnel's performance commissions and bonuses decreased due to the decline in performance this year [92][95] - The Group provides ongoing training for all employees, including Directors and senior management, tailored to their specific fields of operation [92][95] - No significant events affecting the Group have occurred since the end of the reporting period [93][96] Dividend and Shareholder Returns - The company proposed a final dividend of RMB 0.24 per ordinary share for the year ended 31 December 2023, totaling approximately RMB 292,503 thousand, but did not declare any interim dividend for 2024 [150] - The final dividend for the year ended December 31, 2023, is RMB 0.24 per ordinary share, totaling approximately RMB 292,503,000, compared to RMB 307,030,000 for the year ended December 31, 2022 [152] Financial Reporting and Standards - The
中国心连心化肥(01866) - 2024 - 中期财报