Investment Rating - The report maintains a "Buy" rating for China Heart and Heart Fertilizer with a target price of HKD 6.5, indicating a potential upside of 55% from the current price of HKD 4.2 [4][3]. Core Insights - The company reported a revenue of RMB 17.42 billion for the first three quarters, a slight decrease of 0.6% year-on-year, while net profit attributable to shareholders increased by 80.7% year-on-year to RMB 1.53 billion, aligning with expectations [2][3]. - The strong profit growth is attributed to a decrease in raw material prices and stable production operations, leading to a 5% increase in gross profit [2]. - The company sold 100% equity in Tianxin Coal Industry, generating an investment income of RMB 790 million, with a total of RMB 800 million received by the end of the third quarter [2]. Revenue Breakdown - Urea revenue accounted for RMB 5.62 billion, representing 32% of total revenue, with a sales volume of 2.768 million tons, up 33% year-on-year, despite a 14% decline in average selling price to RMB 2029 per ton [3]. - Compound fertilizer revenue was RMB 4.65 billion, making up 27% of total revenue, with stable sales volume and a gross margin increase of 5 percentage points due to higher sales of efficient fertilizers [3]. - Methanol revenue reached RMB 1.89 billion, contributing 11% to total revenue, with a 2% increase in average selling price and a 17% rise in sales volume [3]. - The report anticipates a seasonal fluctuation in demand for compound fertilizers and a gradual stabilization of fertilizer prices due to supply constraints and recovering demand [3]. Financial Performance - The company achieved a gross margin of 30% for urea, 17% for compound fertilizers, and 8% for methanol, with notable improvements in profitability across various segments [3]. - The report projects a revenue growth rate of 4.1% for FY2024, with net profit expected to increase significantly by 73.4% [5][7].
中国心连心化肥：业绩向好，成本优势明显