Core Viewpoint - The company experienced a decline in net profit in Q1 2025, but long-term value remains intact, with projected net profits increasing significantly from 2025 to 2027 [1][3]. Financial Performance - In Q1 2025, the company reported revenue of 5.85 billion yuan, a year-on-year increase of 1.7%, while net profit was 200 million yuan, a decrease of 30% year-on-year [1]. - Urea revenue was 1.54 billion yuan with a sales volume of 965,000 tons, maintaining year-on-year levels, but the price decreased by 23% to 1,592 yuan/ton, leading to a gross margin drop of 13 percentage points to 18% [2]. - Compound fertilizer revenue reached 1.56 billion yuan with a sales volume of 600,000 tons, a 14% increase year-on-year, but the price fell by 4% to 2,599 yuan/ton, maintaining a gross margin of 14% [2]. - Methanol revenue was 800 million yuan with a sales volume of 354,000 tons, a 22% increase year-on-year, with the price rising by 4% to 2,270 yuan/ton and a gross margin increase of 4 percentage points to 10% [2]. - Melamine revenue was 160 million yuan with a sales volume of 32,000 tons, a 7% decrease year-on-year, with the price down by 18% to 5,106 yuan/ton and a gross margin drop of 21 percentage points to 22% [2]. - DMF revenue was 290 million yuan with a sales volume of 78,000 tons, a 9% increase year-on-year, with the price decreasing by 9% to 3,668 yuan/ton and a gross margin increase of 4 percentage points to 16% [2]. Industry Outlook - The demand for urea in China is projected to be 69 million tons in 2025, with agricultural demand at 43 million tons (3% growth) and industrial demand at 22 million tons (5% growth), while export volume is expected to reach 4 million tons, a significant increase of 1,438% [3]. - Changes in export policy from comprehensive restrictions to structured regulation are anticipated to alleviate domestic urea supply surplus, with total export quotas not exceeding 4.25 million tons in 2023 and a defined export window from May to September [3]. Investment Recommendation - The company maintains a target price of 6.5 HKD, representing a 49% upside potential based on a projected P/E ratio of 7.4 times for 2025, with expected net profits of 1 billion, 1.76 billion, and 2.6 billion yuan for 2025, 2026, and 2027 respectively [1][3].
中国心连心化肥(1866.HK)：短期业绩波动不改长期价值