Investment Rating - The report assigns a "Buy" rating for the company with a target price of 6.5 HKD, indicating an 83% upside potential from the current price of 3.6 HKD [3][2]. Core Insights - The company achieved a 26% year-on-year growth in net profit for the first half of 2024, exceeding expectations, despite a decline in fertilizer and fine chemical product prices [2][1]. - The strong cost advantage of the company allows it to maintain high profitability even during a downturn in urea prices [2][1]. - The increase in sales volume of efficient fertilizers contributes to an improvement in profit margins [2]. Financial Performance Summary - Revenue for the first half of 2024 reached 12.06 billion RMB, remaining flat year-on-year, while net profit attributable to shareholders was 690 million RMB, up 26% [2]. - Urea revenue was 3.83 billion RMB, a 9% increase year-on-year, with a 13% price decline but a 25% increase in sales volume, leading to a 2 percentage point increase in gross margin to 31% [2]. - Compound fertilizer revenue was 3.41 billion RMB, a 6% increase year-on-year, with a 6% price decline and a 13% increase in sales volume, resulting in a 6 percentage point increase in gross margin to 18% [2]. - The chemical business continues to expand, with methanol revenue increasing by 32% year-on-year to 1.29 billion RMB, and DMF revenue growing by 14% to 600 million RMB [2]. Future Outlook - The company is expected to experience a peak in capital expenditures from 2024 to 2026, with several new projects set to commence production, including a compound fertilizer project in Huludao and a 60,000-ton polyformaldehyde project in Xinjiang [2]. - To alleviate financial pressure and focus on its core business, the company has sold its 100% stake in Xinjiang Tianxin Coal Mine for 1.37 billion RMB, providing a one-time income boost [2].
中国心连心化肥：逆势扩张彰显战略远见，强大的成本优势助力穿越周期